The Finance Minister has fluffed the hard sell on company tax cuts as more Liberal-National MPs speak out and call on the Turnbull Government to drop the company tax cuts.
On ABC Radio National this morning it was put to the Finance Minister that there hadn’t been a noticeable increase in business investment as a result of the Trump tax cuts:
ESLAKE: People are pointing to the US as an example but in reality there doesn’t seem to have been any lift in business investments since the Trump administration‘s tax cuts came in. In other countries like the UK and Canada which have been cutting corporate taxes for much longer there’s no evidence at all that they’ve done anything to boost employment growth or business investment or productivity or innovation
FRAN KELLY: That’s economist Saul Eslake on the Talking Business podcast a few days ago. No evidence at all…
CORMANN: Well that’s actually wrong.
KELLY: And what’s investment growth…
CORMANN: Well, massive capital investment has been returned to the United States. I mean the evidence on the ground is very clear, the Trump tax cuts have led to stronger investment, to stronger growth, to lower unemployment rate and to higher wages.
The facts are that in 2018 in the US, there has been no discernible lift in business investment, with business investment growing at around 5% in the first two quarters of 2018, which is around average quarterly growth since the GFC. And spending on new business equipment is growing more slowly now than it was at the end of 2017.
You only have to listen to seasoned observers of the United States economy to see that the corporate tax cut is not having the desired effect on investment.
As Michael Gapen, chief United States economist for Barclays said in recent weeks “Business spending is not picking up the way proponents of the tax cut had hoped”.
Meanwhile, US share buybacks are booming with questionable benefits for the American worker.
It’s ironic that the Finance Minister and Government wants the Senate to pass the entire big business company tax cut at the same time as its own MPs have stopped listening to the message with Michelle Landry and Ken O’Dowd calling on the Government to spend the tax cut revenue on other priorities.