Big employers pile on the pressure over company tax

Retailers have ramped up the pressure on crossbench senators to pass company tax cuts.

Woolworths boss Brad Banducci at the Town Hall Store in Sydney. Picture: John Feder

Australia’s second largest employer, Woolworths, has joined a national campaign by retailers to pressure the Senate crossbench to back the government’s company tax cut plan, warning that jobs and wage growth are at stake with the sector now facing the lowest retail sales growth in 50 years.

In a blunt message to Labor and the Senate crossbench, the $310 billion sector that employs 1.25 million people says without a globally competitive tax rate, investment will dry up, creating barriers for jobs growth for younger and entry level workers.

Woolworths Group chief executive Brad Banducci told The Australian it was an undisputed fact that a lower company tax rate in line with the trend emerging in the rest of the developed world would see the company invest more in Australia.

“There is no question that a more competitive corporate tax rate would enable us to invest even more in value for our customers, in our stores and in our local communities,” Mr Banducci said.

“We know these are the things that matter most to our customers, and will ultimately determine our ability to grow jobs and create new opportunities for our team.”

Mr Banducci’s comments follow those of other leading CEOs, including BHP boss Andrew Mackenzie, who told The Aus­tralian last week that there was now “urgency” for Australia to make up lost ground.

The Australian Retailers Association, representing more than 7500 small to medium-sized businesses as well as large companies, yesterday said the sector was ­already struggling, with sales growth 1 per cent down on the 50-year average. “The current trading environment has seen many retailers doing it tough,” said Russell Zimmerman, executive director of the ARA.

“At 30 per cent, Australia has one of the highest corporate tax rates in the advanced economic world, making it difficult for retailers to invest in jobs growth and increased wages that would benefit the economy.

The ARA insists the present corporate tax rate discourages international and Australian businesses from investing in Australia and calls on all sides of politics to drive investment and accept the economic benefits tax cuts will create. The Senate needs to co-­operate with the government to lower the corporate tax rate below 25 per cent so retailers are able to invest in their businesses and grow the Australian economy.

“If the corporate tax rate is not reduced to be more in line with our international counterparts, employees and the underemployed will be the ones who suffer, as employees are the heart and soul of retail. Retailers have told the ARA that balancing rising cost pressures with low sales growth and a high-tax environment is becoming increasingly difficult, with some retailers even struggling to pay their rent.

“As retailers are already struggling in a volatile trading environment, the ARA will continue to advocate for a reduced company tax rate before it stifles future employment and growth.”

Scott Morrison has issued a challenge to the Senate to act in the national interest and pass the rest of the plan, which would see tax rates drop from 30 per cent to 25 per cent for all businesses by 2026. The Nick Xenophon Team is refusing to budge on going any further than the first phase of the government’s enterprise tax plan, which secured cuts from 30 per cent to 27.5 per cent for businesses under $50 million turnover.

The Treasurer and Finance Minister Mathias Cormann have argued that even at this lower rate, Australia would be well behind the US, which has lowered its rate from 35 per cent to 21 per cent, sparking other nations to lower their rates for fear of being left stranded.

Malcolm Turnbull heads to the US today for a meeting with Don­ald Trump, where they will discuss his corporate tax overhaul.

Woolworths, which has more than 190,000 employees, has also rejected the claims that many large companies pay little or no tax, with the Woolworths Group paying an effective 34 per cent tax rate, which delivered $729m in tax revenue in the last financial year, making it one of the highest taxed companies in the world.

The National Retail Association, which represents the retail service industry, has also called on the Senate to support the changes, claiming it would lead to an immediate increase in “entry-level employment for young people”.

NRA chief executive Dominique Lamb said tax cuts would lead to many large-scale Australian retail companies employing more Australians. “The NRA urges Senate crossbenchers to support this legislation in the interests of jobs for young Australians,” she said.

“The retail sector is one of the largest employers of Australians, and is most readily able to respond to government efforts to increase training or employment.

“Larger retail businesses are the backbone of entry-level employment opportunities, and we would expect a quick upscale in employment should the Senate legislate these tax cuts.’’