The Turnbull government wants to cut the corporate tax rate from 30 per cent to 25 per cent across the board but so the Senate has only agreed to cut the rate for businesses with a yearly turnover of up to $50 million.
Labor is staunchly opposed to the plan, which the Turnbull government hopes will restore its political fortunes while also stimulating the economy.
If the government’s package was to somehow guarantee wages growth it could potentially shift the votes of some on the Senate crossbench. It could also help win over the public, which polling shows is deeply sceptical of the cuts.
But Australian Chamber of Commerce and Industry chief executive James Pearson said the idea was unworkable.
“It’s important that individual firms be able to make the decision that suits them best, in terms of what to do with the money. Each firm will be best-placed to judge how best to invest in its future earning potential,” he said.
“More often than not, that involves investing in people. They could hire more people, invest in better training for their people. Or they could pay higher wages, particularly if they want to hold on to good staff at a time when labor is in higher demand.”
Business Council of Australia chief executive Jennifer Westacott said the tax cuts would already lead to wages growth.
“Regulating wage increases without lifting productivity and increasing economic activity would see businesses creating fewer new jobs or increasing prices as they try to remain competitive,” she said.