Tax relief shapes as a post-election headache

Josh Frydenberg has set a collision course with big business if the Coalition wins the election, over the issue of tax cuts.

Treasurer Josh Frydenberg during the treasurers debate with Opposition treasurer Chris Bowen yesterday. Picture: AAP

Josh Frydenberg has set a collision course with business if the ­Coalition wins the election by pledging against revisiting tax cuts for companies with a turnover of more than $50 million.

The Treasurer yesterday said there were “no plans” for tax relief for corporate Australia under a Morrison government, with business groups warning Australia would lose its international competitiveness under the current two-tier company tax system.

Business has also called on the government to have a more ambitious industrial relations agenda if it retains power, declaring companies need more flexibility in hiring and firing workers.

“We have no plans to change the company tax rates. We tried that and you know what the story is,” Mr Frydenberg said at the ­National Press Club in Canberra.

Scott Morrison led the charge for a flat 25 per cent business tax rate when he was treasurer in the Turnbull government, but could only win Senate support for lowering the rate from 30 per cent for companies with a turnover of up to $50m.

Malcolm Turnbull dumped plans to attempt tax relief for big business in the final days of his prime ministership because the controversial proposals could not get through the parliament, leaving bigger companies with a 30 per cent tax rate.

Business Council of Australia chief executive Jennifer Westacott said lowering big business tax rates would encourage investment and employment.

“As a share of GDP, business ­investment in Australia is around the same level it was as we emerged from the 1990s recession. We need an economy-wide signal to encourage businesses to invest in innovation, new jobs and higher wages,” Ms Westacott told The Australian.

Australian Chamber of Commerce and Industry chief executive James Pearson said a two-tier corporate tax rate deterred ­medium-sized businesses from growing.

“Australia will struggle to remain competitive if the tax rate for larger businesses remains as high as it is. It will increasingly put us out of step with the world,” Mr Pearson said. “And making it harder for larger firms to compete and succeed will actually have knock-on effects for smaller businesses. Because most smaller businesses actually do most of their business with larger businesses.”

Mr Pearson also called on the Coalition to be more ambitious on industrial relations, including leaving the door open for deregulating the jobs market.

Council of Small Business of Australia managing director Peter Strong said Mr Morrison was “afraid” to talk about industrial relations.

He said the Coalition should do more to take on misinformation being promoted by the union movement.