TREASURER Wayne Swan will reassure business the federal government is still on the case to reform the tax system, despite ditching a promised cut in the corporate tax rate in last week’s federal budget.
In a speech he will make today, Mr Swan again blames the federal opposition and the Greens for rejecting a move to cut the corporate tax rate to 29 per cent from 30 per cent, a reduction that was to be funded by the minerals resource rent tax.
“I want to make it really clear that the Gillard Labor Government is still in the cart for genuine business tax reform,” he says in his address to the New South Wales Business Chamber of Commerce in Sydney.
The government will keep working with the business community to deliver more relief by seeking a new consensus later this year on tax changes proposed by the Business Tax Working Group that was formed after last year’s tax forum.
He wants affordable tax reform that would be funded from savings in the business tax system.
However, he says he is not prepared to stand by and allow “parliamentary gridlock” to deny struggling business the benefits of the mining boom, and why the tax cut funding was redirected to initiatives such as loss carry-back.
“It’s also important to remember that the Benefits of the Boom package in this budget will put more money in the pockets of low and middle income households, which will in turn support business activity, particularly in retail,” Mr Swan says.
The package includes a $1.8 billion boost to family tax benefits, as well as a $714 million loss carry-back for business that allows firms to offset previously paid taxes should they suffer a loss in profits.
Mr Swan says about 90 per cent of the companies expect to benefit from the new loss carry-back are small businesses.
This builds on the $6500 instant write-off for small business and $5000 immediate deduction on a new or used motor vehicle.