Treasurer stands by corporate tax cuts
Treasurer Scott Morrison has stood by his plans to reduce the corporate tax rate to spur wage growth, referencing wage movements in the US following President Donald Trump’s tax cuts.
Currently, the corporate tax rate for businesses under $50 million is set to drop to 25 per cent by 2026-27, but Mr Morrison has made it clear that the government will push for a tax cut for businesses above the threshold.
“I don't think a business that has 60 employees is a big business, but you can have a turnover of more than $50 million, and that doesn't mean you're a big business. So it's tax cuts across the board, now I don't think you're going to get a wage increase in a business that's paying higher taxes,” said Mr Morrison.
“What I want to see is businesses be able to pay their employees more. They're not going to be able to do that if they're kept on a high tax island.
“You cannot grow wages in an economy which is being burdened by higher taxes. It just defies all common sense.”
Mr Morrison pointed to the positive effects of recent tax reforms in the US as proof that Australia should head in the same direction.
“It was very pleasing to see that after some while now, we've seen wage movement in the US, that's actually what sparked a lot of what we've seen in markets recently,” said Mr Morrison.
“That went up 2.9 per cent, so we're now starting to see that normal transmission of what happens when labour markets tighten up you get movements in wages.
"Already businesses are responding in kind to the signal that is being given by the Trump tax cuts. And it's very early days yet. And they're responding in a whole range of ways, it's not just in wages, there are two sorts of rounds to the effect, one is where businesses choose to directly pass those things on.”