Australia's peak union body is preparing for a major political fight with the Turnbull government over tax reform, with a possible rise in the GST that will affect 11 million low and middle-income earners to form a central plank of its "Build a Better Future" campaign.
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But Australian Industry Group chief executive Innes Willox will say, in a speech on Wednesday, that broadening the base of the GST and raising the rate must play a "central role in a [tax] reform package" while backing a business tax cut.
The hardening of positions on tax reform from unions and business underscores the difficulty the government will face in achieving consensus on a tax package.
The Australian Council of Trade Unions national executive met on Tuesday to flesh out plans for a tax campaign focused on fairness that will roll out in the 2016 election year.
Unions believe that while the government has promised welfare recipients won't be worse off under possible tax changes, about 11 million workers, some earning as little $35,000 a year, will be hit by higher living costs.
Instead, they want resources companies such as Chevron targeted and corporate tax avoidance by ASX200 companies, which costs the federal budget an estimated $8.4 billion annually.
The union meeting came as the federal government has allowed debate to run about the prospect of tax reforms that could include a raft of measures including a rise in the GST, cuts to superannuation tax breaks, a reduction in personal income and business tax rates.
To date, the ACTU has met with Prime Minister Malcolm Turnbull - unlike his predecessor Tony Abbott - and has been willing to engage in reform discussions.
But at the meeting on Tuesday, the ACTU hardened its position and will fight for the government to "genuinely address current tax avoidance, concessions and loopholes which are used by wealthy Australians and companies to minimise their tax contributions and which cost the nation billions of dollars" instead of raising the GST.
It wants superannuation, capital gains and negative gearing tax breaks that overwhelmingly benefit the well-off wound back.
ACTU president Ged Kearney said a GST hike would target middle and low-income families "who will experience a rise in the daily cost of living and, despite this being a big hit for low-paid workers in particular, the government seems uninterested in the impact on workers".
"There are many aspects of the tax system which must be looked at that will boost revenue by billions of dollars, starting with making sure multinationals like Chevron are doing the right thing," she said.
In his speech, however, Mr Willox advocates the company tax rate be cut to "no more than 25 per cent" in the next couple of years, a reduction in the overall number of taxes, a reduction in personal income taxes that "reduce the incentive to work" and broadening the land tax base to reduce duties on residential properties.
He also argues for reform of the taxation of superannuation, in line with the Henry tax review recommendations, to reduce tax breaks for the well-off and argues for taking the "fairness question very seriously".
"Tax reform cannot simply be about taking the burden off the rich and placing it on others. But neither should it be about shifting all responsibilities for paying tax to the wealthy," he will say.
"In any tax reform redesign worth its salt, there will be components that make various individuals and groups worse off. Broadening the GST and raising the rate is clearly in this camp. But we cannot turn the tax reform debate into an evaluation of each individual component from the point of view of individual self-interest."
Clarification: An earlier version of this article incorrectly stated that a Senate inquiry recently heard Chevron had paid $248 income tax last year despite earning an estimated $1.73 billion profit from its Gorgon LNG development. In fact, documents filled with the inquiry into corporate tax avoidance show it was Chevron Australia's US parent company that paid income tax of only $248 last year despite earning an estimated $1.73 billion profit on interest charges to its Gorgon LNG development.
