Business pushing case for company tax cuts

Big business has made a renewed push for company tax cuts as the federal government looks at a sweeping post-pandemic economic reform agenda.

But Labor has warned against using the crisis as cover to dust off things the government hasn’t convinced parliament to do during the past seven years.

Reserve Bank governor Philip Lowe on Tuesday backed an overhaul of income, land and consumption taxes as he warned the pandemic would cast a shadow over the economy for a long time.

Business Council of Australia chief executive Jennifer Westacott wants company tax cuts back on the agenda.

“It is important that we have a competitive company tax rate,” she told Sky News on Wednesday. 

“We’re simply asking for a competitive rate so that we can be a magnet for investment.”

A long-planned tax cut for big businesses was shelved in June 2018 after then-prime minister Malcolm Turnbull and Finance Minister Mathias Cormann conceded it wasn’t going to get through the Senate.

The coalition promised before the 2019 election it wouldn’t revive the plan.

But Prime Minister Scott Morrison has said in recent weeks the economic blow from the virus meant positions taken before the election had to be rethought.

Shadow treasurer Jim Chalmers said any new policies had to get the best bang for buck for the economy.

“But we also think this crisis shouldn’t be an excuse just to dust off all of the things that they’ve put forward in the last seven years which haven’t been supported by the community,” he told CNBC.

The government is targeting tax, infrastructure, training, industrial relations and deregulation for reform in the recovery phase.

“We’ll look at tax reform as an area of interest because we’re always looking for opportunities to cut taxes,” Treasurer Josh Frydenberg told Sky News.

Despite Dr Lowe raising the issue of the consumption tax, Mr Frydenberg played down any changes to the GST.

He was instead keen to talk up $300 billion of already legislated income tax cuts, pointing to the government’s flatter tax system.

Coalition reforms mean people earning between $45,000 and $200,000 will pay the same marginal tax rate of no more than 30 per cent from mid-2024.

Mr Frydenberg has spoken to the BCA, the Australian Chamber of Commerce and Industry and the Australian Industry Group about industrial relations reforms.

But in comments certain to anger unions, he said passing the controversial “ensuring integrity” bill was the first priority in industrial relations.

The proposed laws make it easier to ban unions and deregister officials.

However, Industrial Relations Minister Christian Porter indicated canvassing union views on which measures would produce the most jobs and wages growth was a key part of his plans.

How much flexibility was needed to reanimate the tourism and hospitality sectors, for example, was a live question, he said.

“If we can have more flexibility that people can agree as a matter of consensus, (it) puts upward pressure on the number of jobs we create, upward pressure on wages, then that’s obviously worth doing,” he told Perth radio 6PR.

Mr Turnbull’s advice to the Morrison government was not to waste the crisis but equally not to float ideas in the media before they were ready, where they could be picked off one by one.

“Governments everywhere are going to have to look at it and take the opportunity to say to their public, their voters, ‘We have to do some extraordinary things here’.”

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