Tax changes proposed by the Federal Labor Opposition could lead to fewer job opportunities, the Australian Chamber of Commerce and Industry claims.
ACCI CEO Kate Carnell said the proposed changes could also have significant “unintended” consequences for major project investment.
Labor leader Bill Shorten recently unveiled the proposed changes – his first substantial tax policy as Opposition leader.
He said Labor could raise almost $2 billion in extra revenue by cracking down on multinational profit shifting and boosting funding for the Australian Tax Office to investigate corporate tax avoidance.
Ms Carnell said the changes should only be considered as part of coordinated global action along with other OECD nations.
“Labor's tax changes could make Australia a less attractive place for international investment, thereby pushing new projects offshore and hurting jobs,” she said. “Any changes to Australia’s international tax rules must be made in cooperation with our OECD partners and be part of the wider tax white paper process. Otherwise we run the risk of undermining investment and worsening unemployment."
“Recently there have been major changes to thin capitalisation rules and now is not the time for unilateral action.”
Ms Carnell said business needs greater consistency and certainty in our tax laws if Australia is to remain an attractive place to invest and do business.
Mr John Osborn, ACCI Director of Economics & Industry Policy, said: “All businesses need to pay their fair share of tax and it should be paid in the country in which profits are made. That’s why we support the Government’s efforts through the G20 to address the issue of base erosion and profit shifting. But we need to be careful we don’t reach for blunt solutions that end up doing more harm than good."
“A lot more thought needs to go into the proposed worldwide gearing ratio to ensure that legitimate activities overseas don’t have negative consequences for operations in Australia. It is not yet clear that Labor’s proposal does this.”
The Australian Industry Group said the proposed changes should be rigorously assessed to ensure they do not come at the detriment of economic growth and jobs.
AiGroup Chief Executive Innes Willox said Australia needs a tax system that raises predictable revenues without unnecessarily hindering economic growth and jobs.
“Ad-hoc taxation reform that pits one group against another will not lead to the taxation system that we need.”
Mr Willox said Labor’s proposals would deter multinationals from doing business in Australia to the detriment of the national economy.