'On shifting sands': business frustration with tax cut backflip
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'On shifting sands': business frustration with tax cut backflip

Kate Morris started her online beauty business with $20,000 in savings from a room in her Murrumbeena student share house.

Forced to wear a coat and gloves indoors to beat the chill, she's grown that start-up into global business Adore Beauty with a turnover of more than $25 million and 120 staff.

Kate Morris of Adore Beauty has had enough of policy changes.

Kate Morris of Adore Beauty has had enough of policy changes. Credit:Darrian Traynor

Ms Morris is frustrated by ALP leader Bill Shorten's backflip after he said earlier in the week a Labor government would repeal corporate tax cuts for businesses with turnover of between $10 and $50 million.

"I think the real challenge for any business owner is you are already on shifting sands with so many changes to the world with respect to technology that it does make it very difficult to try and plan," she says. "You are trying to plan forward with your budget to decide how many people you can hire next year and having to put caveats in terms of who might win the election makes it hard."

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Ms Morris would like more certainty.

"Pick a position, but let's just try and stick with it," is her advice. "Consider your positions before you come out with them because it does affect a lot of people, I have 120 staff."

Different tax rates

Bill Shorten's announcement still leaves the government and the Opposition at odds on corporate tax. The Labor Party will not back the futher round of cuts that would see the corporate rate eventually fall from 27.5 per cent to 25 per cent.

Ms Morris is sanguine about the amount of company tax her business pays.

"You have to consider that we are on a global playing field but at the same time I fully support businesses playing tax as we need education and hospitals and roads," she said. "There's more things to life than tax."

Ms Morris said there were some lessons in leadership for business from Mr Shorten's abrupt policy changes.

"One of the challenges of leadership ...  is doing the right thing and also taking the time to work with your team to get people on board with the vision and bring people with you and it sounds like he hasn't done that in his own party," she said. "Not that Malcolm Turnbull has been much better to be honest."

 Peter Strong is relieved by the policy change.

Peter Strong is relieved by the policy change.Credit:Richard Briggs

'He saw the light'

Small business advocates expressed relief at the policy change but are still lobbying for Labor to match the coalition's committment to a 25 per cent tax rate over time.

Peter Strong, chief executive of the Council of Small Business of Australia, says sticking with the tax cut is a good move by Mr Shorten.

"We appreciate being listened to," he said. "But we still believe tax needs to get down to 25 per cent for all businesses to maintain Australia's competitiveness."

Small business and family enterprise ombudsman Kate Carnell said: "We are very pleased that he saw the light really and it will give small to medium businesses confidence that they can plan based on federal government legislation."

Ms Carnell said policy flip-flopping makes life difficult for small business.

"From my perspective it is frustrating as I don't think you can argue the SME sector is the engine room of the economy and at the same time not have the policy settings in place to allow them to be competitive," she said.

"He has to commit to not changing the current legislation which means reducing 27 per cent to 25 per cent over time. Businesses plan around what the law actually is."

With the OECD average corporate tax rate sitting at 23 per cent and the UK moving to a tax rate of 17 per cent by 2020 Ms Carnell says Australia is in the "upper echelons" of company tax at 27.5 per cent.

"For small to medium businesses they should have a corporate tax rate that is competitive globally," she said.

But for Ms Morris it's not all about tax.

"Yes I am aware there are other territories with lower tax rates than Australia but I think Australia has a lot more going for it than tax," she said. "You have to take a broader view of the world."