Bill Shorten backflips on $20 billion tax rise
Labor leader Bill Shorten has abandoned a $20 billion tax rise on 20,000 Australian businesses, after days of internal pressure and condemnation from the business community.
Members of Labor's shadow cabinet were summoned to Sydney on Friday to finalise Labor's position on the policy after Mr Shorten announced on Tuesday that Labor would repeal tax cuts, which have been in effect since last July, for businesses earning between $10 million and $50 million if it is elected.
Mr Shorten said he regretted taking the position.
"I tell you what, the optics of not changing your mind and not listening are far worse," he said.
Mr Shorten said that, after lengthy consultation, he had decided "any proposition [to change] already implemented tax rates would create great uncertainty".
"Today, my colleagues and I have decided to amend our position. I now accept that simply stopping at $10 million would have created more confusion and it was not the main game."
Mr Shorten said he would not repeal the tax cuts that have been in place since last July, but "would repeal all corporate company tax cuts that may have been legislated or not implemented".
Businesses turning over between $25 million and $50 million are due to receive a tax cut from 30 to 27.5 per cent from Sunday.
Shadow treasurer Chris Bowen confirmed Labor had received policy costings on the policy from the Parliamentary Budget Office only after Mr Shorten's announcement on Tuesday.
"In recent days we have also found that the cost of this amendment on company tax cuts is not as great as we thought and only Labor can do tax reform in this country because we have done very serious economic reforms," he said.
The government last year won the support of the crossbench to legislate a cut in the company tax rate from 30 to 25 per cent over a decade for companies with annual turnover of up to $50 million.
Mr Shorten shocked colleagues on Tuesday by vowing to repeal all the gains for companies above a $10 million threshold, even though the policy had not been discussed in shadow cabinet or by caucus.
Friday's decision is a blow to Mr Shorten's leadership after he defended the policy as necessary to deliver greater funding to schools and hospitals.
"It's all a matter of values," he said on Tuesday.
"[Prime Minister Malcolm Turnbull] has made it very clear - he's for the top end of town, I'm for our hospitals and school funding.''
The government estimated that a "rollback" of the first phase would mean increasing taxes by $20 billion over the decade on companies with turnover of more than $10 million a year.
More to come