The nation of Australia is currently debating whether to include a new round of tax cuts tat could allow businesses to save billions over the next five to ten years. According to The Guardian, the Labor party has not ruled out supporting Prime minister Scott Morrison’s government “plan to bring forward tax cuts for small and medium businesses by five years at a cost of $3.2bn.” Under the plan, “the government will lower the tax rate for businesses with an annual turnover of less than $50m from 27.5% to 25% by 2021-22 rather than from 2026-27 as currently legislated.”
The initial plan was also to include tax cuts on big businesses as well, but this portion was paused in favor of exclusive focus on medium and small business thanks to the Senate in 2017.
According to the government, the new tax cuts would mean “that a small business, such as an independent supermarket or a pub, that makes $500,000 profit, will have an additional $7,500 in 2020-21 and $12,500 in 2021-22 to invest back into the business or staff, or help to manage cash flow.”
This new plan will be made difficult by the government’s first priority which includes “spending $14bn over 10 years on public schools.” In addition, “Labor has pledged to repeal stages two and three of the government’s income tax cuts, which together flatten tax scales so workers earning between $40,000 and $200,000 pay the same rate.”
How Australia will respond to this remains to be seen, but it appears small and medium businesses will receive great benefits over the next decade.