Woolworths, Caltex, Imperial Tobacco and the Ten Network would be among the hundreds of companies frozen out of the $35.6 billion remaining of the company tax package under a renewed push to cut benefits to companies with a turnover of more than $500 million a year.

The move, mooted by Senate crossbenchers to get the terminal tax cuts across the line, would see an extraordinary $1.5 trillion in turnover per year quarantined alongside more than 560 companies, according to figures from the Australian Tax Office.

While the data does not show company profits – the pool of money from which taxes are paid – it indicates the slab of the economy that could be excluded to bring crossbenchers back to the negotiating table.

Eliminating some of the country’s largest companies would leave the Turnbull government billions of dollars to play with that could be used to lure crossbenchers through small business grants or further income tax cuts.

The majority of the cost of the tax cuts comes after 2023 when businesses with more than $1 billion in annual turnover (including mining giants and the big four banks) become eligible for the tax discount.

Independent senator Derryn Hinch said he hoped part of the company tax bill could still be saved.

“If they put it at $500 million I would vote for it tomorrow,” he said ahead of a meeting with the Coalition’s chief negotiator Mathias Cormann next week.

There is no contingency plan to restrict the cut to $500 million, “at this stage”, a government source said.

Economists have lashed the proposal from the crossbenchers, warning it will encourage businesses to stop growing and keep their turnover below $500 million a year.

“The dividing line is entirely because of politics not economics,” said Deloitte Access Economics partner Chris Richardson.

Grattan Institute chief executive John Daley said restricting the cuts was “nothing like a first best solution,” and that the economic benefit of the changes was derived from corporations who employ the most people.

“It really does create incentives for companies to stay under a certain size,” said Mr Daley.

Unlike personal income taxes, which are divided by brackets, company taxes are paid on every dollar of profit.

“If all of a sudden a company tips over the threshold, the company starts paying more tax across all of its profits,” said Mr Daley.

One Nation has indicated further negotiations with the government are off the table but the party has changed its stance on tax several times in the past two years.

A spokesman denied its backflip was due to the upcoming Longman byelection in Queensland, where recent ReachTEL polling by the Australia Institute found up to 38 per cent of One Nation voters wanted company taxes increased.

“We haven’t seen any polling, it has nothing to do with Longman,” he said.  “It was the budget papers, they spoke loud and clear.”

Senator Hinch confirmed One Nation had been lobbying him “passionately and at great length” to support the company tax cuts days after the budget, where One Nation was disappointed not to see a commitment to an apprenticeship scheme and increases in taxes paid on resources.

The executive director of the left-leaning institute, Ben Oquist, said the think tank had launched a campaign targeting One Nation voters and senators to help kill off the tax cuts ahead of the Longman poll.

“Labor’s citizenship byelections have cruelled Turnbull’s tax cuts,” said the institute’s chief economist Richard Denniss.

Extracted from WA Today.