Chances of the Turnbull government and the Senate striking a compromise to limit company tax relief to businesses with an annual turnover of $500 million or less have been dealt a blow, with One Nation leader Pauline Hanson demanding a crackdown on multinational gas companies first and another key senator warning he would pull his support.
But the possibility of bringing forward the already legislated reduction to 25 per cent for businesses with a turnover capped at $50 million remains a live option ahead of next week’s make or break effort by the government to pass further company tax cuts.
The government has four of the eight crossbench votes it needs for the second tranche of its package to reduce 30 per cent corporate tax rate. It came close to getting the tax cuts passed in June until One Nation backflipped.
It is understood Finance Minister Mathias Cormann has started lobbying Senator Hanson this week in a bid to convince her and colleague Peter Georgiou to change their minds. If the government is successful, the final two votes from the Centre Alliance are expected to then fall in line.
Crossbench senator Derryn Hinch has proposed a compromise of $500 million in turnover for the tax cut, which would exclude the big banks, but the government is insisting it remains all or nothing.
Senator Hanson said she was taking a “balanced view” but remained concern the tax cuts were unaffordable unless more was down to get money from
“It was One Nation that got $50 million for the government in the first round which cost the country $35 billion,” she told Sky News.
“We have supported personal tax cuts and they are $144 billion. To pass the other unlimited corporate tax cuts that’s going to cost us another $45 billion which will not come in for eight years.
“That’s a total of $224 billion. Where is the money coming from?
“Go after the multinationals on the gasfields of the North West Shelf that we are not getting money out of. Of $55 billion gas up there that we export out of our country, to pull in only $400 million a year it is not good enough,”
“I want them to get a revenue stream from the multinationals coming into this country before I say turnaround and give them any more tax cuts.”
Senator Hanson said the government was “not interested” in setting a $500 million threshold.
“They won’t do it,” she said.
Senator Hanson has been influenced by discussions with officials during her recent visit to Ireland, which has reduced its corporate tax rate to 12.5 per cent but even then still experienced tax avoidance.
“I would dearly love to look after the Australian businesses that need a tax cut. We have looked after the small and medium size family businesses up to $50 million turnover. We’ve done that,” she said.
“This is a race to the bottom. If we keep reducing corporate tax cuts [sic], we don’t have the revenue coming into the country, they will actually have to put up the GST, which will be the nail in the coffin for a lot of families and businesses out there,” she said.
Liberal Democrat Senator David Leyonhjelm – whose support the government is counting on – said he would not support any compromise over thresholds because entrenching a two-tiered tax system was “dreadful policy”.
“That’s not an option because they lose me and Cory [Bernardi],” he said.
“It’s extremely bad policy because it is a punishment for success.”
The government has been debating internally about how long to persist with the company tax package following the super Saturday byelections, with some backbenchers including Tony Abbott arguing the government needed to move on rather than be held hostage by the Senate.