June 28, 2018 / 2:26 AM / 10 months ago

Australia forced to shelve $48 billion company tax cut as senators scuttle bills

FILE PHOTO: Australian Finance Minister Mathias Cormann arrives at G-20 plenary during the IMF/World Bank spring meeting in Washington, U.S., April 20, 2018. REUTERS/Yuri Gripas

SYDNEY (Reuters) - Australia center-right government was forced on Thursday to shelve for at least two months its plans to cut company taxes by around A$65 billion ($47.79 billion) after failing to get enough support from lawmakers.

“We need more time to make our argument to our (independent) colleagues on the Senate cross-bench and we, of course, will continue to make our argument in the Australian community. That is why we have decided to defer consideration of the legislation to implement our plan,” Minister for Finance Mathias Cormann told reporters in Canberra, the national capital.

Following the lead of the United States, Prime Minister Malcolm Turnbull proposed to cut Australia’s corporate tax rate to 25 percent from 30 percent.

Turnbull had hoped the tax stimulus would boost employment - bolstering his re-election chances - but Cormann said the government had failed to win over enough independent senators. Cormann said the government will seek to put the proposed legislation to Parliament again after its winter recess.

But with a powerful public inquiry hearing damning evidence of misconduct in Australia’s financial sector, many lawmakers are resistant to giving tax breaks to big businesses.

Turnbull must now rely on the economic stimulus of his recently passed A$144-billion ($105.71 billion) package of income tax cuts to strengthen employment and ideally speed up stagnant wage growth.

Despite 26 years without a recession, widening income and wealth inequality is blamed for a 34-month run of opinion polls in which the government has trailed its Labor Party opposition.

Australians must hold a general election by May 2019.

($1 = 1.3622 Australian dollars)

Reporting by Colin Packham; Editing by Eric Meijer

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