ELECTION 2010: Abbott promises to cut company tax from 30% to 28.5% from 2013

The promise, which would cost the Budget $2.1 billion a year on a recurrent basis and will be paid for out of the Coalition’s pool of spending cuts, means the Opposition has now bettered Labor’s promise to reduce to company tax rate to 29% from 1 July, 2013 as part of its mining tax package.

“We will give them a tax cut without a mining tax to pay for it and without a carbon tax to pay for it.” Abbott said this morning.

“We are the low tax party. If there are lower taxes on companies we will have more successful companies and a more prosperous economy.”

The cut to company taxes is the centrepiece of the Coalition’s small business policy. Other key planks of the policy – many of which were announced earlier this month as COSBOA’s national conference – include:

• A commitment to cut red tape by instituting a one-in-one-out rule where the introduction of a new regulation would be matched by the removal of another.
• A commitment to “work with banks and regulators” to find ways to improve access to funding.
• A commitment not to go ahead with changes to the way independent contractors are taxed.
• A commitment to make the position of small business minster a Cabinet post.
• A commitment to extend unfair contracts to small business.

“We want to do more, but it is only what we can afford,” Opposition treasury spokesman Joe Hockey said.

For the first time in a campaign, the issue of access to finance by small businesses has been addressed. Hockey said finance for SMEs was “incredibly expensive and hard to get, so we are focussing on how we can help those SMEs.” 

Opposition spokesman Bruce Billson said a Coalition Government would “work with regulatory authorities and the bank to ensure better access to finance” although the exact strategies for addressing the problem were not outlined.

“We need to remember that that half the economy and half of everyone that has a job is in the small business community.”

While the potential cut in company tax remains 35 months away, Abbott says the reduction is affordable and will help to create a “more prosperous society”.

While the cut in company tax was squarely aimed at the small business community today, it is also likely to be seen a sweetener for bigger businesses who would be hit with a 1.7% levy on their profits to fund Abbott’s parental leave plan.

Meanwhile Prime Minster Julia Gillard has been forced to defend herself against claims that she opposed Labor’s parental leave plan and an increase in payments to pensioners.

The claims, leaked to the Nine Network, are believed to have come from a senior Labor insider.

Gillard told reporters that the two measures had a total cost of $50 billion over the next 10 years and while she supported them, she did question whether they were affordable.

“The question at the forefront of my mind was are they affordable. I believe that that is the appropriate approach to take…and it is the approach that I will take in the future,” Gillard said.

“You can be passionate about doing something and hard-headed about doing them.”