CEOs told to join fight for tax cuts

Scott Morrison has issued an extraordinary rallying call to corporate leaders.

Treasurer Scott Morrison. Picture: Sam Ruttyn

Scott Morrison has issued an ­extraordinary rallying call to corporate leaders to get behind the government’s tax cuts, writing to hundreds of chief executives across the country to warn them they risk a Labor government that could wreck the economy and ruin their businesses.

The Treasurer told the business community that it could no longer “sit on the fence” when it came to supporting Coalition policy to reduce taxes.

“Despite the distractions and interruptions in politics this year, the Turnbull government has remained focused on delivering on our economic agenda,” Mr Morrison told The Australian. “Business knows this is the right way forward and can’t afford to sit on the fence when it comes to supporting policies like our enterprise tax plan. “Labor’s plan is to increase taxes on business and investment. Our plan is the opposite. Business cannot afford to stay out of this contest. It’s not about being partisan, it’s about supporting what they know to be right for our economy.”

His intervention comes as Malcolm Turnbull prepares to ­deliver a headland speech to the Business Council of Australia ­tonight in an attempt to reboot the government’s economic message and untangle itself from the same-sex marriage debate and the citizenship crisis that has crippled the Prime Minister’s leadership.

It is understood Mr Turnbull will urge the business community to unite behind the campaign for the full reduction in company taxes, which has little chance of passing the current parliament, warning of economic ­decline should Australia become internationally uncompetitive. Mr Turnbull will single out US President Donald Trump’s proposed corporate tax cuts as a ­direct threat to continued investment in Australia, following a Treasury report warning that without a competitive tax regime, Australia is at risk of an irreversible economic decline.

A survey of chief executive members of the BCA found that 90 per cent believed failure to implement the tax cuts in full would result in lower economic growth, with fewer people being employed and less investment spending.

The Australian can reveal that the Treasurer has sent an 80-page document to several hundred business leaders pushing the case for company tax cuts.

In an implicit message to the corporate world that it had been missing in action in pushing the public case for tax reforms, Mr Morrison warns of the “dark ­vision” of a Labor government that would drive the country into “economic stagnation”.

“I have attached for your information a publication containing a series of addresses I have delivered since July, that outlines the government’s national economic plan and where I see the economic challenges and opportunities going forward,” the covering letter says. “As the global economy improves, it is critical that we ­remain focused on delivering and building on this plan, so we can continue to grow jobs and ­ultimately boost the wages of Australians.

“The evidence of the better days ahead I first spoke of in this year’s budget continues to present. We have now experienced the longest consecutive jobs growth in 23 years and business conditions are at record levels.

“The opposition’s alternative of higher taxes, bigger deficits and more debt would wreck our economy. It’s a dark vision that sells the Australian people short and would drive us into economic stagnation.”

The BCA has been pressing the case for the parliament to complete the passage of the government’s enterprise tax plan. So far, it has only passed tax cuts for companies with turnovers of up to $50 million.

The Senate has blocked the rest of the legislation which would see the company tax rate gradually reduced to 25 per cent for all companies over a decade. Labor claims the company tax cuts cannot be afforded while the budget remains in deficit and should not be a budget priority.

The council’s survey showed 80 per cent of chief executives would lift investment and 70 per cent would lift employment if the full package were passed.

It found that 73 per cent believed their own company’s international competitiveness would be improved if the tax plan were passed. “The business leaders we’ve surveyed know how investment decisions are made in boardrooms around the world. Their message is clear: we need a competitive tax system to ensure that our economic potential is realised,” chief executive Jennifer Westacott said.

She noted that the International Monetary Fund, Treasury and Australian business leaders had all pressed the case for company tax cuts or face the loss of investment.

One chief executive commented that foreign investment was highly sensitive to the rate of return, which was driven in part by the corporate tax rate. Another said that a lower tax rate would create more free cash flow to reinvest in the business, with additional staff and higher wages.

Commenting on the survey, Mr Turnbull said other countries were lowering their corporate rates, with the US House of Representatives last week voting to cut the corporate rate from 35 per cent to 20 per cent. “Australia cannot afford to be left behind,” he said. “We need a level playing field to help our economy compete and prosper. If we don’t reduce our corporate rate to 25 per cent as planned over the coming decade, our businesses will be paying higher taxes than almost every other advanced economy. This means Australian jobs and opportunities will go overseas.”