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Thousands of employers face a $20 billion tax hike under a Labor government in the wake of a shock decision by Opposition Leader Bill Shorten to repeal most of the Coalition’s company tax cuts if he wins power, sparking claims his “roll back” plan will punish workers.
The Turnbull government is aiming to mobilise business against the new Labor policy in a bid to warn 20,000 small employers – including local supermarkets, service stations and mechanics – about the hit to their fortunes under a change of government.
Mr Shorten sparked a political furore over his policy pledge as critics accused him of a “captain’s call” that was made without consulting his shadow cabinet or the wider Labor caucus.
Industry chiefs said they wanted an urgent meeting with the Opposition Leader out of concern the move was a blow to confidence that could set tax reform back a decade.
Business Council of Australia chief executive Jennifer Westacott warned that employers were “stuck in stasis” from the political clash in Canberra when decisions were needed to help the economy grow faster.
“A week of political glory could mean ten years of slow economic growth,” she said.
More than 25 medium sized businesses in Braddon and 40 in Longman – where voters will head back to the polls on July 28 – would be stripped of the planned tax cut, according to a government analysis of Tax Office data.
A Shorten Labor government would repeal already legislated company tax cuts for businesses turning over between $10 and $50 million.
Fairfax Media has been told of concerns about Mr Shorten’s judgement following his announcement, which took his own colleagues by surprise after months of discussion in the opposition’s shadow ministry.
While the announcement triggered speculation that Labor might “roll back” the tax cuts to an even lower threshold of $2 million, Fairfax Media understands the $10 million benchmark is the final policy.
Council of Small Business chief Peter Strong warned that any Labor plan to apply a $2 million threshold would be a “declaration of war” on business.
Mr Strong said Labor had introduced more uncertainty into tax policy in a way that would discourage small employers from hiring more staff or turning casual staff into permanent positions.
Mr Shorten said his opposition to the tax cuts was a question of Labor priorities compared to the agenda set by Prime Minister Malcolm Turnbull.
“I don’t agree with Mr Turnbull that multinationals should get a tax cut,” he said.
“It’s all a matter of values. Now he’s entitled to his opinion, he’s made it very clear – he’s for the top end of town, I’m for our hospitals and school funding,” he said.
“Give me a break, they are not multinationals,” Treasurer Scott Morrison said.
The move sharpens the political divide on company tax cuts just as Finance Minister Mathias Cormann tries to get the second phase of the plan through the Senate, hoping to cut taxes for all companies after last year securing the cuts for smaller businesses.
The prospects for the bill dimmed on Tuesday when Pauline Hanson’s One Nation hardened its stand against the second phase, leaving Senator Cormann without the numbers needed in the upper house.
The government estimates that a “roll back” of the first phase would mean increasing taxes by $15 billion to $20 billion over the decade, at the cost of companies with turnover of more than $10 million a year.
The tax cuts went to companies with turnover of up to $25 million this year and will be extended to the $50 million threshold on July 1 next week, capturing up to 20,000 businesses according to the government analysis of Treasury and ATO figures.
Source : The Brisbane Times