CANBERRA: Australian Treasurer Scott Morrison has defended his plan to reduce company taxes after the central bank warned the proposed cuts could scuttle plans to get
the national budget back into surplus by 2021. He said in a television interview today that no government tax measure would jeopardise getting the budget into surplus by 2021, a promise that has been made in the last five annual budget statements.
The treasurer noted that besides the US, which has already cut taxes, France, Germany and Britain were all considering company tax cuts and that Australia had to keep up.
“If we don’t, jobs and investment go offshore which is bad for people’s wages, it’s bad for people’s jobs and its bad for growth in the economy,” he said.
When pressed on the risk of rising global interest rates making it harder for the government to service its debt, Morrison stressed the importance of keeping Australia’s ‘AAA’ credit rating. The government is trying to pass legislation to lower the tax rate to 25% from 30% on companies with a turnover of more than A$50 million (RM155 million).
Reserve Bank of Australia governor Philip Lowe told the parliamentary economics committee on Friday that it would be a “big mistake” to pay for corporate tax cuts with a higher deficit. He said the benefits of tax cuts would be short-lived if every country joined a race to the bottom.
