Opposition leader Bill Shorten has reversed his recently-announced plan to repeal the Coalition’s existing tax cuts for medium businesses.
The Labor leader backed down under pressure from within his party to abandon the plan, following a meeting of the shadow caucus in Sydney on Friday morning.
“Today I have recommended to the shadow cabinet that Labor at the next election commit to not changing the existing legislated company tax scale at 27.5 per cent,” Mr Shorten told reporters after the meeting.
"What we’ve done today is to provide certainty."
Labor will keep the existing cut for medium and small businesses, which reduced the rate from 30 percent to 27.5 percent, but will not support future rounds of cuts that would eventually take it down to 25 percent.
Mr Shorten surprised the media and some colleagues when he announced a future Labor government would reverse the recently legislated cuts earlier in the week, simply by answering a reporter’s question with the word “yes”.
Labor's shadow treasurer Chris Bowen said the reversal came after new figures from parliament's independent costing agency showed the cost of keeping the existing cuts was less than the party previously expected.
"We received further parliamentary budget updates in recent days, as late as yesterday, which reflect the most recent budget numbers, and had showed that the cost of moving the threshold from $10 million to $50 million was more manageable than previously estimated," Mr Bowen said.
"We provide as much tax relief as we think is prudent, affordable and reasonable in the circumstances. That’s what Bill was reflecting earlier in the week, that’s what we’re announcing today."
The Coalition has spent the week attacking the opposition for targeting smaller companies like construction firms and small retailers, including family-owned businesses.
“When the leader of the opposition was targeting the ‘top end of town’, he was in Burnie, going after Stubbs Construction with 60 jobs … he was at Varsity Lakes at the Gold Coast, going after Evolve Skateboards with 15 staff,” Mr Turnbull said in Question Time on Thursday.
The prime minister named businesses in the electorate of Labor frontbencher Anthony Albanese – capitalising on recent speculation about leadership tensions.
“There's a great Australian business in his electorate. AussieBum, it makes underwear, founded by Sean Ashby,” Mr Turnull said.
“He says that the attack on his business, and thousands like it, will undermine the future of his business.”
One Labor frontbencher reportedly told The Australian many within the party wanted the decision reversed.
“Many are arguing for the $50 million threshold. It's the only point at which you're not taking money away from people,” the anonymous member said.
As recently as Thursday, shadow treasurer Chris Bowen was defending Mr Shorten's earlier announcement.
“There are tough decisions necessary and the Labor Party, I think it's fair to say, has shown in the past we won't shy away from tough decisions and controversial decisions,” Mr Bowen told 2GB.
The Coalition still wants to extend the company tax cuts – which gradually lower the rate from 30 percent to 25 percent – to all businesses, regardless of size.
But the broader company tax cuts have been stalled in the Senate, with key crossbenchers opposed. The government was forced to , with debate to resume in August.
Labor was facing a campaign from business lobby groups over its planned rollback. The powerful Business Council called the now-scrapped rollback a “blow to common sense”.
