Labor labelled ‘massively out of touch’ on corporate tax cuts as Coalition, Greens respond to latest proposal

Labor are underfire from all corners of the political sphere in response to its latest push to overhaul the corporate tax system.

Prime Minister Anthony Albanese with Industry Minister Ed Husic and New South Wales Premier Chris Minns.

Industry Minister Ed Husic says the time has come for Labor to consider lowering corporate taxes, in a move that will heap pressure on Anthony Albanese and Jim Chalmers.

Mr Husic said attempts by the Coalition to lower the company tax rate had failed due to people feeling that pre-pandemic profits performed well and wages were stagnating, therefore making it “tricky to be able to have that conversation”, according to reports.

This is why “talk of corporate tax reform under the Coalition go nowhere”, Mr Husic said, speaking at the summit on AI in Sydney today.

Mr Husic also said now is the right time to reconsider corporate taxes given progress made on low-paid wages.

“I believe, in the strongest Labor traditions, we need to be able to bring business and labour together and show that everyone wins,” he said.

“And we need to consider … how we do that, either through corporate tax reform or the way in which we provide investment allowances for the uptick in manufacturing capital.

“That is something long term, I think, that does need to be considered.

“We need to see business be able to invest and to free up capital to do that, and if they’re committed to do that, then be able to see that enabled, but having done that too in a way where we see people’s wages and their security or employment improved, and that is going to be the test.”

It comes after the Coalition cut plans to reduce the corporate tax rate to 25 per cent for all companies by 2026-27, with the current rate sitting at 30 per cent for businesses with high turnovers.

Corporations including BHP, the big four banks and supermarket retailders could be the biggest winners should taxes be reduced. Picture: Britta Campion / The Australian

In response, the Coalition has warned that Dr Chalmers’ authority is under threat in the wake of the push for a corporate tax overhaul, while the Greens attacked Labor’s backing of big business during a cost-of-living crisis as “massively out of touch”.

As Mr Husic’s intervention in Dr Chalmers’ treasury portfolio sparked an immediate political fight, Business Council of Australia Chief Executive Bran Black endorsed the Industry Minister’s support for corporate tax changes.

In the absence of a move on corporate tax, the BCA has strongly advocated for an economy-wide investment allowance that would “boost economic growth and opportunities for Australians”.

“Modelling shows a 20 per cent investment allowance would grow GDP by $17bn and boost wages,” Mr Black said.

“Australia currently has the third highest corporate tax rate in the OECD and in a globalised world, that is impacting our competitiveness and ability to win investment. Australia has been a net exporter of capital for the last four years, sending investment offshore, something which has not happened for over 100 years. This is attributable in part to other countries, like the United States, lowering tax rates.

“I’m pleased the federal government seems open to have this conversation, because its pipeline of new economy initiatives, particularly through its Future Made In Australia Act, will rely on a competitive tax rate to drive private investment into sectors like critical minerals and renewable energy.”

Opposition Treasury spokesman Angus Taylor said Mr Husic’s intervention undermining Dr Chalmers shows “just how confused this government’s economic priorities are”.

“All Labor’s done over the last two years is increase company taxes – clamping down on franking credits, winding back investment incentives and refusing to extend the instant asset write off,” Mr Taylor said.

“We’ve also seen businesses being wrapped in red and green tape. Meanwhile, the Industry Minister is calling for company tax to be lower.”

Mr Taylor said the economy was “suffering from this lack of clarity”.

“Australian businesses are suffering from this lack of clarity. And Australian families are suffering from this lack of clarity. Jim Chalmers is a weak Treasurer and his colleagues are rolling all over him.”

Greens Treasury spokesman Nick McKim told The Australian that Mr Husic’s call for lower corporate taxes is “massively out of touch and ignores the struggles of millions of Australians facing rising costs and stagnant wages”.

“One-in-three of Australia’s biggest corporations pay no tax at all – this is where Mr Husic and his Labor colleagues should be focusing. The Greens are fighting for a tax system where big corporations pay their fair share so we can fund essential public services like housing, healthcare and education,” Mr McKim said.

“Instead of reducing corporate taxes, we should be introducing a super profits tax to make sure that the corporations who have driven inflation contribute to a fairer society.

“Lowering corporate taxes would also sabotage our climate efforts, rewarding industries that pollute our environment. Fossil fuel corporations already enjoy substantial subsidies. Our priority should be holding them accountable for their environmental impact.”

Mr Black said for Australia to attract investment into emerging sectors: “we need to address our out-of-date taxation system, which includes company tax and other productivity-enhancing tax changes”.