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Labor business tax policy reversal – Ai Group comment

"The decision of the Shadow Cabinet to recognise the deep concerns of the business community and to now support company tax reductions for businesses with turnovers of less than $50 million a year, is welcome," Ai Group Chief Executive, Innes Willox, said today.

"The consternation demonstrated by business over the past few days after an earlier indication of a different position underlines how much businesses rely on certainty in policy making to take decisions around job creation and investment, especially on issues like competitive tax rates.

"The decision announced today will hopefully reduce the uncertainty faced by those businesses and give them greater confidence to lift investment. In turn, this will underwrite increases in productivity, employment and incomes.

"Since the tax relief for small businesses was legislated last year there has been uncertainty around the Opposition's approach to the tax cuts if elected. This has led some businesses to withhold investment that would be attractive at the lower company tax rate. To date this uncertainty has undermined the benefits of these tax cuts and today's decision by Shadow Cabinet should be applauded as one that will stimulate investment and job creation.

"However, regrettably, today's decision still leaves uncertainty around the next phase of tax cuts for these businesses to 25% where Labor remains uncommitted to delivering on that next round of cuts.

"We look forward to further discussions with the Opposition on tax policy with the aim of a bipartisan commitment to lowering Australia's corporate tax rate for all businesses to a more internationally competitive rate of 25 per cent over the medium term. This goal was first articulated by the Henry Tax Review in 2010 and must remain a national aspiration," Mr Willox said.

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