Shorten under pressure to declare position on corporate tax cuts

Business groups are urging Labor to declare its position on corporate tax before July 1.

Australian Chamber of Commerce and Industry chief executive James Pearson.

Business groups are urging Labor to declare its position on corporate tax before July 1 when companies with a turnover of up to $50 million are due to receive tax cuts, which Bill Shorten has failed to publicly support.

Australian Chamber of Commerce and Industry chief executive James Pearson warned some businesses would decide not to take advantage of the extra cash in the new financial year out of fear the tax cuts would be wound back by a future Labor government.

“There’s no doubt that what we need to see is both major parties backing in the entirety of the tax plan,” Mr Pearson said. “If you’re not certain that a legislated tax cut is going to be delivered, it’s obviously got to make you think twice about whether you take advantage of that tax cut in terms of investing in your firm and making longer term decisions”.

On July 1, companies with a turnover of up to $50m will start paying a reduced tax rate of 27.5 per cent, with Labor yet to say whether it will keep the cuts.

Labor has only committed to tax relief for small companies with up to a $2m turnover. It is considering lifting the ceiling on tax relief for businesses with a turnover of up to $10m.

Council of Small Business of Australia chief executive Peter Strong told The Australian that any move by Labor to unpick the already legislated tax cuts would be “very destructive”.

“How do you plan when you’re between that $10m to $50m (turnover) range?” Mr Strong said. “It just makes so much sense to have the tax break up to $50m.

“It is vitally important that they (Labor) get the policy out there. People will want to know, am I going to have this or not.”

Mr Strong warned that Labor was putting jobs at risk by not committing to the government’s tax cuts, arguing businesses with turnovers of up to $10m might only employ eight people. “The profit margin is not big,” he said. “It would be incredibly bad policy”.

Finance Minister Mathias Cormann took aim at Labor for opposing the second phase of the government’s company tax cuts, which would reduce the corporate rate for all entities to 25 per cent by 2026-27. The legislation is fiercely opposed by Labor and the Greens, with the government needing to secure the votes of two more crossbenchers to pass its legislation through the upper house.

“By putting jobs at risk, Bill Shorten would hurt Australian working families wanting to get ahead,’’ Senator Cormann said. “Bill Shorten has decided to put Australian workers at a competitive disadvantage with workers in other parts of the world, whose employers pay materially less tax.”

The two key Senate crossbench voting blocs, One Nation and Centre Alliance, have argued that any push by Labor to revoke tax cuts for businesses with a turnover above $10m would lead to job losses and hurt small-time “mum and dad” entrepreneurs.