Only about 40,000 of the 870,000 small businesses getting a tax cut under the Coalition’s “jobs and growth” plan are likely to use the bonus to expand their operations, according to the Council of Small Business of Australia (Cosboa).

Cosboa strongly supports the tax cuts and investment incentives offered by the Turnbull government in its May budget’s “jobs and growth package”, but its chief executive Peter Strong said the extension of the instant asset write-off for investments would give the government much more “bang for its buck” in terms of economic growth than the additional tax cuts.

And he said the tax cut would benefit only the minority of businesses that left the extra money in their company to pay for expansion. Strong estimates that would be around 40,000 businesses over the next few years, which he says was “still a very good figure”.

The economic benefit of the $48bn tax cut package is at the heart of Malcolm Turnbull’s election campaign. The first tranche of the tax cuts flow to businesses with a turnover of up to $10m. The prime minister says those companies employ five million Australians and it is “self-evident” that “they will all benefit from that support because they will see more investment in their business”.

The tax cuts are also central to the Coalition’s negative campaign, with Turnbull accusing Bill Shorten of waging a “war on business” because Labor opposes most of the tax cut plan.

Turnbull said on Tuesday: “He [Shorten] has got this view that you can increase taxes on investment ... you can refuse to give small and medium businesses a tax cut, let alone large ones, and that that will have no effect. He’s kidding himself. The truth is governments need to provide incentives for growth and we’ve done that.”

Labor has backed the proposed tax cut from 28.5% to 27.5% for businesses with a turnover under $2m but says it will oppose the rest of the government’s $48bn in company tax cuts that extend that lower rate to businesses with a turnover under $10m and, over time, to all companies. It argues that using the money for education, health and infrastructure spending will drive both economic growth and employment and a better society.

From 1 July, the government is also proposing that access to an instant write-off for purchases of equipment valued at $20,000 – due to end on 30 June 2017 – will be extended from the current cap (businesses with turnover of up to $2m) to businesses with a turnover of up to $10m – and continued for one more year.

According to Strong this measure will have the biggest impact on growth.

“My members see that as by far the better incentive. We think it will have a much bigger effect in boosting growth. Tax cuts are part of the whole package and we think that is a good thing, but it is the instant asset write-off that will give them the bang for their buck,” Strong said.

The government has relied on Treasury modelling to show that the tax cut will permanently boost gross domestic product by 1.2% in the long term – by which it means 20 years or more – at the cost of $48.2bn.

But analysts including John Daley from the Grattan Institute have pointed out that the same modelling shows its economic benefit to Australians is more like 0.6%.

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