National

Business up in arms over Labor’s tax move

By AAP Newswire

Business groups have responded angrily to Opposition Leader Bill Shorten's decision to roll back most of the legislated tax cuts for small and medium-sized firms, with one calling it a "big kick in the guts".

After months of deliberation, Mr Shorten promised to rescind tax cuts for businesses with turnovers of between $10 million and $50 million if Labor wins government, a decision the Turnbull government is calling a "captain's call" and a $20 billion tax hike.

Mr Shorten did not discuss the tax decision with Labor's party room.

Business Council of Australia head Jennifer Westacott said it was a hit to confidence and questioned how business was supposed to do its planning.

"It's a real blow to competitiveness, it's a blow frankly to common sense," she told reporters in Canberra on Tuesday.

"We're not a cottage industry economy."

Australian Industry Group chief executive Innes Willox said the "continually changing and unpredictable policy landscape" just adds to the risks businesses and their workforces have to navigate.

Adding to the uncertainty, Labor is still considering what it will do about tax cuts already in place for businesses with turnovers between $2 million and $10 million.

"We said that we will support any Australian business with an under-$2 million turnover to get a tax reduction," Mr Shorten told reporters after delivering a speech in Canberra.

"We think that small business can do with all of the assistance they can get."

Peter Strong, the chief executive of the Council of Small Business Australia said if the tax cuts are pared to just firms with a turnover of up to $2 million it will be a " declaration of war on business".

Australian Chamber of Commerce and Industry boss James Pearson said it was a "big kick in the guts" by the Labor party.

"This is precisely the wrong signal to send to the Australian business community ... these are not big businesses," he told Sky News.

Treasurer Scott Morrison said rolling back the tax rates would put $20 billion of taxes on about 20,000 businesses.

"This is terrible news for 1.5 million Australians who work in those businesses," Mr Morrison told reporters.

Parliament last year agreed to corporate tax cuts for businesses with a turnover up to $50 million.

Businesses with a turnover of up to $25 million are already enjoying a reduction to 27.5 per cent from 30 per cent, while businesses turning over up to $50 million see a reduction from July 1.

Under the government's plan, all companies will benefit from a corporate tax rate of 25 per cent by 2026/27.

Labor's announcement took the spotlight off the government which appears to be struggling to get the necessary eight out of 10 crossbenchers to support tax cuts for larger businesses before parliament rises before the winter break.