The Business Council of Australia has raised strong concerns over a proposed 5% cash flow tax, warning the policy risks pushing investment offshore and reducing Australia’s economic competitiveness. The measure, recommended by the Productivity Commission, forms part of a broader discussion on corporate tax reform ahead of an upcoming government roundtable on economic policy.
According to News.com.au, the tax would apply primarily to companies with annual revenue exceeding $1 billion, without offering the benefits of a reduced company tax rate. While details remain limited, the concept of a cash flow tax has already drawn resistance from major industry figures across multiple sectors.
Reform Proposal Linked to Upcoming August Roundtable
The proposal for a cash flow tax emerged ahead of the federal government’s August economic reform roundtable, with the idea coming from the Productivity Commission. The suggested model would impose a 5% levy on the net cash flow of businesses—essentially their total incoming cash minus operational outflows.
The proposal includes a reduction in the company tax rate to 20% for businesses earning less than $1 billion annually. But firms exceeding that threshold would not benefit from the tax cut and would instead face an effective additional 5% tax burden, a move that has alarmed large employers and investors.
Impact on Large Businesses Sparks Concern
Companies such as BHP Group, Woolworths, Coles, as well as major banks and telecommunications firms, would be affected directly by the cash flow tax, without receiving relief through the corporate tax rate change. Critics argue that the policy fails to encourage growth in the very businesses that are critical to Australia’s economic infrastructure.
Speaking at the Business Council of Australia’s annual dinner—attended by Prime Minister Anthony Albanese and the heads of the country’s largest corporations—Bran Black, the BCA’s chief executive, strongly rejected the tax’s design and implications.
This is a policy that would push away capital and lose jobs, tax revenue, dividends, superannuation contributions, supply chain spend and productivity – Black warned.
By the same token, we’ll also stay resolutely opposed to policy ideas that scare business investment away.
He continued,
Inflexible, unbalanced workplace relations settings such as multi-employer bargaining and legislatively mandated work-from-home settings. Uncompetitive and ill-conceived tax ideas such as a cash flow tax. AI regulation that condemns us to be a technology taker.
Long-Term Uncertainty Seen as Barrier to Investment
Geoff Culbert, BCA president and former CEO of Sydney Airport Corporation, also weighed in, arguing that the tax would inject uncertainty into long-term planning and undercut major investment projects.
Indeed, even the spectre of an increase in taxes makes it very hard to underwrite long-dated projects that need certainty – Culbert said.
We need to close down that conversation as quickly as possible.
He added that
Further regression on industrial relations
was another
Clear line in the sand,
Suggesting that a rollback of some current labor policies should be considered by the Albanese government.
They should not be off the table – he added.
Culbert also threw his support behind eliminating unnecessary regulation:
Removing regulations such as environment approvals and red tape was wholeheartedly supported – he said.
We can’t move fast enough on this.
Government Signals Investment-Focused Tax Policy
Prime Minister Anthony Albanese, who also addressed the gathering, said Labor’s broader economic vision would center on policies that attract investment while maintaining equity. He reiterated that the government’s tax reform approach would prioritize
Fair and affordable ways to incentivise greater business investment and capital deepening.
While he did not directly endorse or reject the proposed cash flow tax, the Prime Minister’s remarks suggest a preference for measures that promote growth without undermining investor confidence.
