Barely half of Australian businesses believe a tax cut would help them, a new survey has found, and only 8 per cent plan to spend the savings on pay rises.
The National Australia Bank survey of 914 businesses, published on Thursday, found only 52 per cent said lower rates would better secure their future prospects, while a fifth thought cuts were unnecessary.
A further 14 per cent reported paying no tax at all, and 14 per cent did not know if they paid tax.
When asked how they would spend any tax cut, the largest proportion of businesses (32 per cent) said they would increase investment, followed by paying off debt (17 per cent) and increased hiring (14 per cent).
Only 8 per cent said they would spend the savings on increased wages.
“These responses mirror what economic theory would suggest – namely that desired company tax reductions would show up first and primarily via increased investment, with follow on impacts to employment and subsequently wages,” NAB chief economist Alan Oster wrote.
“The reluctance to pay down debt further was interesting and perhaps reflects the current low level of gearing in business today.”
Smaller businesses were keener on the cuts. Those with fewer than 100 workers wanted cuts averaging 7.4 percentage points, while companies with more than 200 workers wanted an average cut of 6.1 points.
Businesses with yearly turnover below $50 million have already been given a corporate tax cut of 5 percentage points over the next decade, down from 30 to 25 per cent.
The Turnbull government is trying to gain Senate support to extend the new rate of 25 per cent to big companies as well, including the big banks.
Shadow Finance Minister Jim Chalmers said the survey findings proved the government’s planned tax cuts would fail to address stagnant wage growth and underemployment.
“Given the mess the Liberals have made of the budget, an unfunded $65 billion tax cut is the last thing this country needs,” Dr Chalmers said in a statement.
“The deficit is currently forecast to be eight times bigger than the Liberals predicted in their first Budget, net debt has doubled and gross debt has crashed through half-a-trillion dollars for the first time ever and growing with no peak in sight.
“Malcolm Turnbull needs to do the right thing in the budget and ditch his $65 billion big business tax handout.”