IRS payment plan, which is what the new tax rules were intended to do, but it’s now a question of the timing.
The government says the extra taxes will make up for the $80bn in lower-than-expected GST revenue over the next four years and has said it will fund the measures using cash from the federal government.
Treasury said today the $80bn over four years will be covered by “a net reduction in income tax and corporate income tax” as the Australian Tax Office (ATO) gets a bigger slice of the GST mix.
“From 2020-21 onwards, income tax receipts would be about $80bn per year higher than the current Budget forecast, while corporate income tax receipts would be about $60bn lower than the current Budget forecast,” Treasury said.
The Treasury also said the extra income taxes will boost economic growth and lift productivity.
The government said the lower corporate income tax rates will reduce corporate tax avoidance and also make multinationals pay more tax.
Treasury said businesses will no longer be able to write off losses under the “deemed repatriation rules”, which it said would make them pay more tax.
Treasury also said the extra income taxes will reduce the drag on income growth from increased employment taxes and also help address the problem of “over-taxed businesses” that have been stalling growth.
Treasury said that the first phase of the income tax reduction has resulted in an estimated $11bn of tax savings for Australian businesses.
The next stage, in 2020-21, will reduce the corporate tax rate to 25 per cent, before the full plan to reduce the corporate tax rate to 22 per cent is completed by 2023-24.
Treasury also said the corporate tax cut would save Australian families $300,000 on average over the next 10 years.
Treasury said: “The Budget’s announcement that the government will be progressively reducing the corporate tax rate is expected to stimulate economic growth, increase income, boost employment and improve productivity.
“It will also benefit families and businesses by reducing the costs of running their operations.”
Labor accused the government of being in “denial” on tax reform.
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