The Business Council of Australia (BCA) has urged the government to drop a proposed cash flow tax, warning it would hurt investment, slow growth, and increase household costs. In its submission to the Productivity Commission, the BCA argued that the tax would create unnecessary red tape for millions of businesses.
According to BCA modeling, the policy could cut about 0.5 percentage points from annual GDP growth. Leaders said the measure would distort investment choices and create a two-tier corporate tax system. They argued large firms would face higher effective tax rates, discouraging productive capital spending.
The Council described the plan as complex and harmful to economic momentum. It called for simpler, pro-growth reforms instead of new burdens. Business leaders stressed that Australia’s investment share of GDP already sits near historic lows, and fresh obstacles could deter new capital, especially in energy and housing sectors.
Consumer groups and industry associations backed the warning. They said the tax would eventually raise prices for goods, fuel, and services. Together, they cautioned that the measure would drag productivity rather than drive innovation.
In its submission, the BCA proposed alternative reforms. It recommended cutting red tape, simplifying regulation, and removing inefficient tax distortions. The Council urged policymakers to strengthen incentives for business expansion instead of adding complexity.
If Canberra adopts the tax, business confidence could weaken and recovery could slow. Rejecting the plan, however, could reinforce growth and investment. The final decision will reveal whether the government prioritizes simplicity and competitiveness or pursues experimental taxation.
