With the Turnbull Government's proposed corporate tax cut stalled in the Upper House, the business lobby has been ramping up efforts to convince a handful of crossbench senators to pass the legislation.
Senator Watt is on shaky ground. Although he accurately points out that half of the signatories to the BCA letter represent companies that did not pay any corporate tax in 2015-16, it is a stretch to suggest this means these companies would not be in a position to pass on potential future benefits — however small — in the form of higher wages. As experts noted, using a single year (in this case, 2015-16) to make a broad assertion about the future is problematic. Should the legislation be passed, the tax cut would not apply until the next decade for some larger companies. In their letter, the executives left open the timing of future wage increases resulting from the tax cut, promising stronger wages growth "as the tax cut takes effect". As experts pointed out, whether a company pays corporate tax in a given year depends on a range of factors, including market conditions, past capital investments and tax offsets. Not paying company tax in a particular year does not mean a business will not pay company tax in the future. Indeed, some of the signatory companies that did not pay corporate tax in 2015-16 have indicated they are on track to pay corporate tax in the near future. Economic modelling by Treasury and other analysts has concluded the corporate tax cuts would also broadly boost the economy, although the impact is likely to be modest. Whether other policies would be more effective in boosting wages is a different issue, and not the subject of this fact check; nor is whether the corporate tax plan — which is expected to cost about $65 billion over a decade — is in the nation's best interests, or should be prioritised over other budget measures.
Fact check: Would companies that paid no tax in 2015-16 be unable to benefit from a tax cut so as to invest more and help lift wages?
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