Chances of the Turnbull government striking a compromise company tax deal have been dealt a blow, after One Nation leader Pauline Hanson demanded a crackdown on multinational gas companies first.
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 the 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 again 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 told Sky News she was taking a “balanced view” and pointed out One Nation had already supported $179 billion in company and personal tax cuts.
But she remained concerned the tax cuts were unaffordable unless more was done to raise revenue from multinationals.
“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,” she said,
“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.”
Senator Hanson said the government was “not interested” in setting a $500 million threshold.
“They won’t do it,” 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.”
Another option that has been canvassed is accelerating the reduction in the company tax rate for businesses with a turnover of less than $50 million, who currently pay 27.5 per cent. The rate is legislated to begin creeping down from 2024-25 and hit 25 per cent in 2026-27.
But calculations by left-leaning think-tank the Australia Institute suggest reducing the rate to 25 per cent will be costly for the budget. The institute estimates the current tax cuts will ultimately cost $5 billion a year in foregone revenue but bringing forward the reduction would mean having to find an extra several billion dollars so as not to affect the overall bottomline.
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.