Ed Husic has company over call to cut corporate tax levy

Labor MPs have backed a push for the nation’s company tax rate to be looked at ahead of the next election, after Jim Chalmers sidestepped calls by Industry Minister Ed Husic to consider slashing the taxes on corporate profits.

Industry Minister Ed Husic. Picture: NCA NewsWire / Martin Ollman

Labor MPs have backed a push for the nation’s company tax rate to be looked at ahead of the next election, after Jim Chalmers sidestepped calls by Industry Minister Ed Husic to consider slashing the taxes on corporate profits.

Despite Mr Husic’s intervention on company tax earlier this week, the Treasurer refused to be drawn in parliament on whether he endorsed the idea, declaring only that it was “entirely consistent with the sorts of things that we have been saying for some time”.

Several Labor MPs on Wednesday said they were open to the tax rate being reduced, given the impact on Australia’s “global competitiveness”.

The current tax rate for companies with turnovers of more than $50m sits at 30 per cent; small to medium-sized businesses are subject to a rate of 25 per cent.

Tasmanian backbencher Brian Mitchell said it was important to implement changes where needed and nothing “was ever fixed”, particularly when it came to tax.

“It’s important we keep a watching brief on these things,” he said. “There’s always a state of flux … where we need to change things as sensible. Nothing is ever fixed or situated and the world does not stand still.”

NSW MP Mike Freelander, who owned his own medical clinic for many years, said he wanted to see the tax rate cut for small to ­medium-sized businesses.

“We need to look at our global competitiveness,” he said.

“I’d like to see us do more with small business … who’s compliance costs are huge. I think we should look to reduce the ­company tax rate for those small businesses.”

Labor MP Mike Freelander. Picture: Richard Dobson

Increasing pressure from within Labor to implement tax reforms for business come as Coalition MPs called on Peter Dutton to take the promise of slashing company taxes to the next election.

Backbenchers including Gavin Pearce, Aaron Violi and Matt O’Sullivan all urged changes.

“Cutting the tax rate is better than picking winners,” said Mr Violi, who was elected to the Victorian seat of Casey at the last election.

“It has to be (in our election platform) and as part of that broader conversation on tax reform. It’s surely a major handbrake on investment.”

Senator Sullivan also raised concern with the disincentive that Australia’s company tax rate presented to global businesses.

“We have a higher company tax rate than most other Western nations,” he said.

“So we risk losing business. I will always be for lower taxes.”

The business community is advocating that Mr Husic’s call for the tax rate to be looked at should be seriously considered by the Labor Party cabinet.

Hutchinson Builders chairman Scott Hutchinson said the company tax rate in Australia of 30 per cent should be brought into line with other jurisdictions such as the US and Britain of 21 per cent and 25 per cent respectively.

Mr Hutchinson, who heads one of Australia’s biggest private builders, said the real focus should be cuts in personal tax rates.

“Forty-five cents in the dollar is just crazy,” he said, referring to the top personal tax rate.

The Australian understands senior cabinet figures tried but failed to convince Dr Chalmers to include a more generous investment allowance in the May 14 budget.

Mr Husic was asked on Tuesday whether the 30 per cent company tax rate was needed to halt the shrinking of the manufacturing sector’s capital and he responded that it was something that needed “to be considered”.

“We need to see business be able to invest and free up capital,” Mr Husic told the Australian Fin­ancial Review’s AI summit.