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Malcolm Turnbull backs away from company tax cut

Prime Minister Malcolm Turnbull with Assistant Treasurer Kelly O’Dwyer on Tuesday. Photo: Ben Rushton Primer Minister Malcolm Turnbull on ABC TV. Photo: ABC

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Prime Minister Malcolm Turnbull appears to have put the brakes on recent momentum towards tax relief for corporate , saying a company tax cut would be “an enormous charge on the budget at the present time”.

“The problem is affordability,” Mr Turnbull told ABC’s 7.30 program.

“A cut [of] 5 per cent or 10 per cent in the corporate tax rate would be an enormous charge on the budget at the present time.

“It would stimulate growth, but it would have a cost to the budget … affordability is very important.”

His comments contrast with a speech delivered to an n Chamber of Commerce and Industry dinner last month where he declared the government was “looking at company tax”.

“In a world of highly mobile international capital, it’s important for us to continue to have the right company tax settings to attract investment and maximise growth and jobs,” he told ACCI members.

Amid ongoing argument over the level of the GST, he also told the Coalition party room in November that the two biggest threats to the n economy were bracket creep and “high company tax”.

Business Council of president Catherine Livingstone has been urging the government to lower business taxes, arguing it would have the greatest positive effect on growth and productivity.

Treasurer Scott Morrison and Finance Minister Mathias Cormann have both referred to ‘s corporate tax regime as high by international standards.

But on Tuesday, Mr Morrison also appeared to pour cold water on relief for companies, saying: “You’re talking tens of billions of dollars over the budget and forward estimates.”

Company tax brings in about $80 billion a year.

Mr Turnbull said the government’s $1.1 billion innovation package provided “very generous tax credits, or tax offsets” for investing in start-up companies.

On Tuesday, Mr Turnbull was asked again by reporters whether tax cuts would stoke innovation, he said cuts would have a positive economic effect.

“But they come with a cost,” he said.

“The Assistant Treasurer [Kelly O’Dwyer] and Treasurer [Scott Morrison] have got to make sure the budget adds up.”

But Mr Turnbull has insisted that everything remains on the table.

“Almost all taxes have some degree of brake on economic activity. That is why we are looking at the redesign of the tax system,” he said.

The Business Council of  has been sought for comment.

Meanwhile, former Liberal treasurer Peter Costello has warned the government about making the upcoming election the fourth campaign dominated by the GST.

“If the Coalition goes ahead with that proposal, you can put down the glasses and stop worrying about other policies,” he wrote in a column for News Corp.

“It will swamp everything. It won’t matter what happens on defence or security or industrial relations or anything else. It would make 2016 the fourth election over GST.”

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