The Federal Government has secured a win in its fight to cut the corporate tax rate.

The first stage of the cut has passed the Senate, but already some argue that the benefits will be more political than economic. 

The bill will see a cut for businesses with turnover under A$50 million, and a cut to the tax rate of companies with a turnover of less than A$10 million this financial year.

The second stage of the tax cut plan will be even harder to sell, as the government seeks to reduce the rate for businesses with a turnover of A$100 million in 2019-20.

The Business Council of Australia is taking it as a good sign, with chief executive Jennifer Westacott saying she is “pretty confident” of a tax cut across the economy.

She warned that having a two-tier tax system would see businesses with close to $50 million in turnover start carving off bits of their companies to remain below the threshold, rather than growing freely.

But the cuts have to be paid for, leading many to question Treasurer Scott Morrison about where the money will come from.

The Treasurer would not rule out tax increases in the May budget. There are also strong rumours of plans to change the capital gains tax discount, and possible action on tax concessions like the exploration concessions in the petroleum resources rent tax.

An article this week by economists Brett Govendir and Roman Lewis argues that many multinationals operating in Australia already pay considerably less than the full tax rate, and so the idea that lowering company tax will bring in more foreign players may not play out in reality.

The experts say that multinational corporations tend to profit shift to lower taxing jurisdictions, and because Australia’s company tax rate is nowhere near that of havens like Ireland and Singapore, they are likely to continue bypassing Australian tax by booking revenues overseas.

“The rate of corporate tax is at best a second order effect in influencing the decisions of foreign companies. Therefore, the gains from the government win in the Senate appear to be more political than economic,” their article for The Conversation states.