Prime Minister Malcolm Turnbull has dumped the government’s plan to cut taxes for big business after its signature legislation was killed off in the Senate.
With his leadership hanging by a thread, Mr Turnbull said the government won’t take its corporate tax package to the next election.
Instead, the government would look at accelerating tax cuts for small to medium businesses.
“We have not been able to secure the backing of tax cuts for the larger companies and what we will now focus on is the small and medium businesses, overwhelmingly Australian family owned which employ most of the Australian private sector workers,” Mr Turnbull told reporters.
The draft laws slashing the tax rate from 30 to 25 per cent for companies with a turnover more than $50 million was stuck in the Senate for months.
Labor and the Greens oppose the legislation so the Coalition needed the support of the two One Nation senators, and two others, to get its bill through.
Finance minister Matthias Cormann had offered a compromise to win One Nation’s support with an amendment excluding the big four banks from the legislation.
But when it came to the vote, One Nation leader Pauline Hanson and her colleague Peter Georgiou, Centre Alliance’s two senators and independent Tim Storer voted against the plan.
As a result, the government could not secure crucial crossbench support for the tax cuts, with the bank carve-out amendment defeated 38 votes to 34.
Peter Dutton, who is cranking up his bid to challenge Mr Turnbull for Liberal Party leadership has pledged to use savings from dumping the government’s corporate tax policy into cuts for households and small businesses.