New stats show 34 state businesses to benefit from tax cuts

Economist Saul Eslake
Economist Saul Eslake

Only nine businesses in Northern Tasmania would benefit from the federal government’s proposed company tax cuts to 2023, according to data from the Australian Bureau of Statistics.

Labor’s candidate for the Braddon by-election Justine Keay – who resigned her seat in the Federal Parliament last week due to citizenship concerns – said this figure highlighted the supposed inequity in the way the benefits of the company tax cuts would be dispersed.

“I just think this is something that the federal government obviously took no consideration of, about the dispersal of where these company tax cuts would actually go,” she said.

Labor’s alternative to the Coalition’s company tax cut proposal is an investment guarantee, which would allow small, medium and big business to claim deductions of up to 20 per cent in the first year on investments in depreciable assets valued at more than $20,000.

“This is an incentive for direct investment in their business,” Ms Keay said.

“Not something that the Liberal Party, through their corporate tax cuts, are hoping on a wing and a prayer that there’ll be investment.”

Tasmanian Liberal Senator Jonathon Duniam said Ms Keay’s comments were an “attack” on business and respected employers.

“It just goes to show [Opposition Leader] Bill Shorten and Justine Keay are bad for jobs,” Senator Duniam said.

Leading economist Saul Eslake said it was not surprising that not many big Tasmanian companies would benefit from the proposed tax cuts, given there were not many businesses in the state with an annual turnover of $50 million or more.

Mr Eslake said not only did he not support the idea of tax breaks for big business, but he also did not support the same for small business.

There is a much more sensible alternative if you think tax breaks do any good and that is to preference new businesses.

Saul Eslake

“There is zero evidence that preferentially taxing small companies does anything to boost employment or investment or innovation,” he said.

“There is a much more sensible alternative if you think tax breaks do any good and that is to preference new businesses.”

Mr Eslake said offering a tax break to new businesses would create new jobs and encourage innovation.

“Small businesses often do choose to stay small so that they can continue to get the preferences, whereas new businesses can’t stop becoming older ones except by going out of business – in which case, they don’t cost you anything,” he said.