The Australian, May 15, 2017
Labor is facing urgent demands to declare support for $29.8 billion of already-legislated small business tax cuts or risk a major blow to Australian competitiveness that will force jobs overseas and deter investment.
Business groups yesterday demanded Labor commit to tax relief for companies with up to $50 million in turnover, warning that Australia’s 30 per cent corporate rate was already a “global outlier” and the fifth highest among 35 OECD economies.
Council of Small Business Australia chief executive Peter Strong said “the company tax cuts have got to stay” amid confusion over whether a Labor government would unwind the Coalition’s tax breaks for companies with more than $2m annual turnover.
“You can’t sit there and write a business plan when you’re not sure if it’s going to be in place or not,” Mr Strong said.
“So they need to come out and say: ‘yes, we will keep that in place so you can plan ahead with certainty’.”
Australian Small Business and Family Enterprise Ombudsman Kate Carnell said small businesses needed certainty to grow and employ. “To revert back to the $2m cap for lower tax rates for very small businesses would seriously impact confidence,” she said.
Bill Shorten has continued to rail against the government’s enterprise tax plan to reduce the corporate rate to 25 per cent across the board by 2026-27 with the total package costing $65.4bn over the decade from July 1.
Opposition Treasury spokesman Chris Bowen refused to say on the ABC’s Insiders program whether Labor would repeal the first phase of the package after it passed the parliament in March. Under the package, companies with a turnover of up to $10m will pay a 27.5 per cent tax rate this financial year.
In 2017-18, companies with a turnover of up to $25m will pay the 27.5 rate before this rate is extended to those with a turnover of up to $50m in 2018-19. All companies with a turnover of up to the $50m threshold will then have their tax rate incrementally reduced to 25 per cent by 2026-27.
Mr Bowen said Labor was still considering whether it would commit to repealing the tax breaks although he did promise a review of all personal tax rates if the party was in government when the budget returned to balance.
“What you should assume in relation to (business tax cuts) already legislated is that we are carefully looking at all options; we will have more to say,” Mr Bowen told Sky News.
Business Council of Australia chief executive Jennifer Westacott issued a sharp warning: “No party can credibly go to the next election promising to hike taxes on investing in Australian businesses, yet this is what Labor now appears to be contemplating,” she said.
Ai Group chief executive Innes Willox said repealing the tax cuts would “send a terrible signal that industry is not welcome”.
“(It) would only serve to reduce competitiveness and drive away potential investment,” he said. “Putting up corporate taxes at a time our competitors are cutting them would serve no good purpose.”
Scott Morrison yesterday claimed Labor was in “chaos” over corporate tax cuts.