Cutting payroll taxes will create more jobs than Turnbull’s plan

One Nation will not be supporting the passage of the Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017, which contains the government’s plan to reduce the tax rate for the big end of town from 30 per cent to 25 per cent in nine years.

My decision not to support the legislation flows from asking what the companies do with the ­additional cash and who will benefit the most.

I listened to the CEOs of our most successful companies, including Orica’s Alberto Calderon, who says tax cuts alone will not be enough to encourage further private investment. I listened to Australians who own shares in these companies. I listened to everyone who gave me their opinion directly or indirectly and it is clear that expert opinion is divided on the benefits of joining the global race to the bottom for company tax rates.

No one knows what companies will do with the additional cash if the legislation becomes law. Companies could pay down debt, ­increase shareholder returns (through increased dividends or share buybacks), lower prices or a combination of any of these.

The government prays the savings will be used by companies to create well-paying jobs and a better standard of living across our community. If its prayers are not answered then a catastrophic tax collection shortfall will follow, which likely will be funded by debt we cannot afford. The recent American tax cuts are expected to double US debt in the first year and add more than $US1 trillion ($1.3 trillion) to debt in 10 years.

We are one of the few countries that avoids double taxation of company profits and we do this by passing the tax paid by the company on profits to the shareholder in what is called a tax credit. These tax credits help workers save for their retirement in industry and retail superannuation funds. If the tax credit cannot be used by an Australian taxpayer then it becomes an ATO refund for retirees.

A reduction in company income tax rates equals a reduction in the value of tax credits and tax refunds for Australians. Plainly the government has not done its homework on the impact of these proposed changes on retirees and workers, and that disappoints me. The cart is before the horse. No progress can be made by the cart.

The availability of these tax ­refunds and tax credits is one of many factors that complicates a simple comparison of tax rates ­between countries. In the US, companies pay federal income tax and state income tax applies in 48 states. The Trump tax rate ­becomes anywhere between 21 per cent and 33 per cent, depending on the state.

So a simple comparison of country tax rates is next to useless. But the government persists in the false claim that company ­income tax rates drive business ­investment.

This is ridiculous — all it does is undermine my confidence in the government and its advisers.

The government needs to better understand the sorts of incentives that will attract investment and it needs to give investors globally competitive electricity and gas prices.

Experts say Australia takes the prize for the weakest tax regime for offshore gas with the consequence that foreign-owned multinational petroleum companies, for the most part, do not pay for our gas, nor do they pay tax on the profits made from our gas, and they expect that never to change.

The recent inquiry into the Petroleum Resource Rent Tax was doomed from the start by the government’s carefully crafted terms of reference.

I shake my head when I see both major political parties get more in political donations from foreign-owned multinational petroleum companies than they pay in corporate income tax. When will the government act so we get paid for our gas?

I supported a tax rate cut for companies below the $50 million turnover point. I remain talking with the government. I challenge the government to do a deal with the states and remove payroll tax ­because that will lead to more jobs.