Election 2022: A closer look at Morrison’s promise of no new taxes for small business
Prime Minister Scott Morrison has pledged no new taxes for small businesses ahead of the May election in a press release laden with eyebrow-raising claims.
Prime Minister Scott Morrison has pledged no new taxes for small businesses in a wide-reaching economic pitch to voters ahead of the May election in a press release laden with eyebrow-raising claims.
The so-called Lower Tax Guarantee promises no new taxes on Australian workers, retirees, superannuation, small business, housing, and electricity, which gives “certainty to millions of workers, retirees and to every small business in Australia”.
“I also guarantee that we will deliver $100 billion in tax relief over the next four years, providing Australians with certainty and helping to deliver a stronger economy,” Morrison said.
“Our government has delivered income tax relief for more than 11 million Australians and reduced small business tax rates to the lowest level in 50 years — we are the party of lower taxes.”
The Morrison government is the second-highest taxing government in the last 30 years. The government collects $9600 more tax from each household in Australia today than when the Liberal government was first elected in 2013, according to analysis.
Labor’s treasury spokesman Jim Chalmers says that — even when adjusted for inflation — the government’s tax take is $1867 more per person when comparing 2013-14 to 2021-22.
Morrison flaunted his small business credentials last week at the debate, telling a questioner his government had reduced the company tax rate and provided the instant asset write-off, though as SmartCompany pointed out, the Coalition government elected not to extend the instant asset write-off, meaning the policy will end in June 2023.
As part of his Lower Tax Guarantee, Morrison almost promised to keep taxes below 23.9% of GDP — indicating it could be on an upward trajectory under his purview. Australia’s total taxation receipts as a percentage of GDP was 22.9% in fiscal 2021, according to the budget, down from 2018’s ratio of 28.7%.
Known as the “speed limit” on taxes, Treasurer Josh Frydenberg continued it was the only way to protect legislated tax cuts from Labor Leader Anthony Albanese, who the Treasurer claims wants to bin them, and who calls them “tax cuts for the top end of town” and “unfair tax cuts”.
The Stage 3 tax cuts will see everyone earning between $45,000 and $200,000 paying 30% in tax from 2024 — that means those earning over $120,000 will pay 30% instead of 37% tax, making the wealthy cohort indeed the biggest winners in the tax cut.
Nevertheless, Labor has already vowed to keep Stage 3 tax cuts if the party win government, something Finance Minister Simon Birmingham acknowledged as a decision reached “begrudgingly” among the Labor party.
In the press release, Frydenberg claims Labor would supposedly go back on this position, continuing that it was “echoed by the Greens, making it abundantly clear that under a Labor-Greens alliance Australian workers and small businesses can never be certain of benefiting from lower taxes”.
Labor Leader Anthony Albanese has repeatedly ruled out forming a coalition with the Greens at the next election in the instance of a hung parliament, saying he would “not negotiate with fringe groups”.
Next cab off the rank — Birmingham — continued that Labor “spends big” and warned it would see Australians “pay more”.
“Labor have made $302 billion worth of vague spending promises, yet they refuse to say how they would pay for them,” Birmingham warned.
Both the Coalition and Labor Party have already promised to release their election commitment costings before the election day as per the regular order of things.
A Coalition spokesman told the AFR: “All Coalition election commitments will be made public and will meet the legislated reporting requirements by providing a list to the Parliamentary Budget Office prior to election day, consistent with previous elections.”
A Labor spokesman said it would also be releasing its costings before the election.
As an aside, Stephen Bartos, a Professor of economics at the University of Canberra, looked closely at the Coalition budget in March compared to Labor’s retort budget two days later.
“There is hardly ever a difference between government and opposition on the broad directions of spending and taxing,” he said.
“The economic parameters are outside of government control — both government and opposition take the officials’ economic forecasts as given.
“Differences between the parties lie not in macroeconomic settings or in the amount of spending, but in what it is spent on.”
