Senate set to dilute grand tax plan

Key crossbench senators expect the Turnbull government's business tax cuts will be limited to just small businesses when the Senate finally get to vote.

Independent senator Derryn Hinch

Independent senator Derryn Hinch is expecting the government to split its company tax cut bill. (AAP)

It's looking less likely the Turnbull government's proposed company tax cuts will remain the grand plan promised by Treasurer Scott Morrison once the Senate gets its hands on them.

But they've yet to even clear the first hurdle.

After six months of on-off discussion on legislation to get the rate down to 25 per cent by 2026/27, there still hasn't been a vote in parliament's lower house.

Debate was adjourned on Thursday and will resume next week at the earliest.

The tax plan was the centrepiece of the 2016 budget, handed down 10 months ago.

Mr Morrison wants his legislation dealt with before the end of next week - the final sitting before the May 9 budget - so companies with an annual turnover up to $10 million get a tax cut mid-year.

Key crossbench senators believe that is probably as far it will get, with cuts for larger businesses "off the table for now".

"I'm saying they'll split the bill to get something through this time and they'll maybe go back to it," independent senator Derryn Hinch said.

"If they dump the top end part of it and just go to the $10 million, yes I'll support it, I'll vote for it."

Fellow Senate crossbencher Jacqui Lambie also wants the cuts limited to small business, as does the Nick Xenophon Team.

But Liberal Democrat senator David Leyonhjlem said he would always vote for tax cuts irrespective of whether he thought they went far enough.

"It's sort of a black and white rule of mine," Senator Leyonhjelm told reporters.

"I'm not happy there seems to be this culture being created that big businesses can pay higher tax rates than smaller businesses,"

If the plan is about to be split, Mr Morrison isn't saying, telling parliament he supported the tax plan with his "heart and soul".

The $50 billion tax plan incrementally lowers the tax rate, starting with a reduction to 27.5 per cent for companies with a $10 million turnover this year, then firms with a $25 million next year and so on until all business have a 25 per cent rate in a decade's time.

Companies presently pay a 30 per cent rate, apart from businesses with a turnover of less than $2 billion, which pay 28.5 per cent.

Labor remains opposed to the cuts, other than for those firms with a turnover less than $2 million.

"You have to draw the line somewhere," opposition finance spokesman Jim Chalmers said.

"The government drew the line at the biggest multinationals and ... $7 billion to the big four banks. That's clearly inappropriate."

If the government ditched the big-business tax cuts it would be the "final humiliation" for the treasurer, he said.

But Prime Minister Malcolm Turnbull told parliament it was Labor that has backflipped on its support for lower business tax rates, "entrenched by the lure of populism".


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Source: AAP



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