TREASURER Wayne Swan yesterday appeared to give a guarantee that small business would get its company tax cut regardless of what happened to the cut for larger businesses but later his office said he had been talking about something else.
The embarrassing slip came when Mr Swan was asked about the political stand-off over the 1? tax reduction for all companies, financed by the mining tax. The cut from 30? to 29? is at risk because it is opposed by the Coalition and the Greens support it only for small business.
Mr Swan said the government did not accept a two-tiered company tax system. But he then implied it might do so when asked on Sky: "You guarantee you will deliver the small business cut?"
He replied: "Of course, of course we will deliver that and we will deliver, as we have delivered in the Parliament in the last couple of days, this tax break for 2.7 million small businesses voted against by the Liberal party 2.7 million small businesses getting the instant asset write-off of $6500."
His office said he was talking about the write-off, when he said "of course". His spokesman said: "Obviously the government will be delivering the small business tax cuts that were legislated on Tuesday night."
Greens leader Bob Brown said his party would not back down. "I've informed the Prime Minister that our policy will stand," he said. "If the government insists . . . it's all or nothing, well, it will be nothing. We'll look to extending assistance to small business in other ways."
In Parliament, Mr Swan stepped up the pressure on the Coalition, producing a Treasury analysis of what it would cost business sectors if the company tax cut was defeated and Tony Abbott imposed a 1.5 per cent increase in the rate for large companies to finance his paid parental leave scheme for the 2013-14 year.
According to Mr Swan, the manufacturing sector would pay an extra $392 million in tax, the retail sector $270 million extra and the wholesale trade sector $400 million. Added tax costs for other sectors would be $188 million for media and telco, $322 million for construction and $306 million for agricultural, forestry and fishing.
Mr Swan told the ABC that the business community would put "enormous pressure on Mr Abbott to act responsibly".
But he rejected employer calls for government action to get trade-offs between wage increases and the proposed rise in the superannuation levy from 9 per cent to 12 per cent.
He pointed out the super guarantee was phased in over six years. It would be on the table when there were wage negotiations, along with a whole range of things.
With a Coalition win in Queensland being predicted this weekend, state Opposition Leader Campbell Newman has refused to say whether he would back a legal challenge to the mining tax. West Australian Premier Colin Barnett has said he will back one if it is mounted by the Fortescue Metals Group.
Frequently Asked Questions about this Article…
What did Treasurer Wayne Swan say about guaranteeing a small business tax cut?
On Sky, Wayne Swan appeared to guarantee the small business tax cut by saying “of course, of course we will deliver that,” but his office later clarified he was referring to the $6,500 instant asset write-off for small businesses and that the government will deliver the small business tax measures that were legislated.
What is the proposed company tax cut and why is it at risk?
The proposal is a 1% company tax reduction from 30% to 29% funded by the mining tax. It is at risk because the Coalition opposes the cut for all companies and the Greens support a cut only for small business, creating a political standoff.
What is the instant asset write-off for small business mentioned in the article?
The instant asset write-off is a $6,500 tax break aimed at about 2.7 million small businesses, which Wayne Swan referenced when defending recent small business tax legislation.
How would defeating the company tax cut affect different industry sectors?
Treasury analysis cited by Mr Swan said a defeated cut with a 1.5% rate increase for large companies would raise costs for sectors such as manufacturing ($392 million), retail ($270 million), wholesale trade ($400 million), media and telco ($188 million), construction ($322 million) and agriculture/forestry/fishing ($306 million).
What is the Greens' position on the company tax cut and support for small business?
Greens leader Bob Brown said his party will not back down and that their policy is all-or-nothing; if the government insists on a universal cut they may refuse support and instead look to extend assistance to small business by other means.
Did the Treasurer agree to trade-offs between wage increases and the proposed superannuation rise?
No — Mr Swan rejected employer calls for government action to force trade-offs between wages and the proposed rise in the superannuation levy (from 9% to 12%), noting the super guarantee is being phased in over six years and would be considered during wage negotiations.
What did Mr Swan say about business pressure on the opposition over the mining tax and company tax cut?
Mr Swan told the ABC that the business community would put “enormous pressure” on Tony Abbott to act responsibly if the company tax cut was defeated and alternative measures were proposed to finance schemes like paid parental leave.
Is there a possibility of a legal challenge to the mining tax and who might support it?
The article notes talk of a legal challenge: Queensland opposition leader Campbell Newman would not say if he would back a challenge, while West Australian Premier Colin Barnett said he would support a legal challenge if it was mounted by the Fortescue Metals Group.
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