Bill Shorten backflips on $20 billion tax rise
Labor leader Bill Shorten has abandoned a $20 billion tax hike on 20,000 Australian businesses following 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 Labor would repeal the tax cuts if elected weeks before they face five byelections.
The tax cuts from 30 to 27.5 per cent for businesses earning between $10 million and $25 million have been in place since July, while cuts for businesses earning up to $50 million were due to begin on Sunday.
Prime Minister Malcolm Turnbull described the back-down as "completely and utterly humiliating" and showed Mr Shorten had "no authority within his own party".
"What he has given today is a vote of no confidence in Australian business and a huge vote of no confidence in himself," he said.
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.
The labor leader said he would not repeal any tax cuts that are in place before the next election, but would scrap cuts that have been legislated but not enacted.
The decision means Labor would still have to push through new legislation if elected to prevent a further cut to 25 per cent for businesses earning up to $50 million coming into force next July.
A builder with a turnover of $10 million and a profit of 10 per cent would save $25,000 in tax if the 2.5 per cent cut went ahead.
The partial back-down still leaves Labor open to attacks that it is still fuelling uncertainty in the business community from the government.
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," 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.