Prime Minister Scott Morrison promises to fast track new business tax cuts

Former Australian Treasurer Peter Costello and Scott Morrison

Former Australian Treasurer Peter Costello and Scott Morrison

The federal government is challenging the Labor Opposition with a plan to introduce earlier than planned a series of tax cuts for small and medium-sized businesses.

Scott Morrison announced on Thursday that the tax cuts for businesses with an annual turnover of less than 50 million Australian dollars (35.36 million US dollars) would be brought forward five years at a cost of 3.2 billion Australian dollars.

Under current legislation, the company tax rate for businesses with turnovers below $50 million has been reduced from 30 per cent to 27.5 per cent.

Mr Morrison believes key crossbench senators who rejected the coalition's plans to slash tax for big businesses in August will back the step.

"And we're on the side of the millions of people they employ".

Mr Morrison says the tax cuts will help many Australians.

Morrison said the government will introduce the legislation during the next session of parliament.

"This change will help to ensure Australian businesses are competitive, to protect our economy and jobs".

The prime minister said that whether the cuts lead to higher wages depends on the businesses that will benefit from the policy.

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While they have been controversial overall, those proposed for small and medium-sized businesses - defined as those with an annual turnover of less than $50 million - have found more support.

"What they want to do, Ross, is just spend more money".

"They employ thousands of Australians and deliver a vital service within our health system and in local communities".

Sole traders will also benefit from a fast-tracked tax cut which will see the headline rate for unincorporated small businesses fall to 16% by 22021-22, instead of 2026-27.

The decision, foreshadowed early last month by the Australian Financial Review, comes as both major parties are gearing up for the 2019 election, with Labor leader Bill Shorten unveiling his own policy mini-manifesto over the weekend. "But, at this stage, we want to crunch the numbers, and I need to go through the proper processes of consulting with my colleagues".

"We're prepared to compromise in the national interest", Shorten said on Friday.

Speaking at the same event where Morrison made the announcement, ALP treasury spokesperson Chris Bowen said he would make a recommendation to the ALP's inner sanctum on whether the party should support the policy "expeditiously".

"We will introduce legislation during the next session of Parliament, fast-tracking our business tax relief for more than three million businesses that employ almost seven million Australians", the two said in a joint statement.

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