Proposed cuts to company tax have come under fire from former federal treasurer Peter Costello for being less effective at boosting the economy than personal tax cuts.
A key plank in the federal government's agenda for economic growth is a proposal to cut the corporate tax rate for most companies from 30 per cent to 25 per cent.
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Trump's Treasury talks tax reform
President-elect Donald Trump's pick for US Treasury secretary, Steven Mnuchin, says the administration would target tax reform and trade pact overhauls as top priorities.
Corporate leaders have backed the plan, particularly in the wake of US President-elect Donald Trump's proposal to slash the company tax rate in that country.
But Mr Costello, who is now Future Fund chairman, said personal tax cuts rather than just company tax cuts were necessary to ensure a more productive and competitive economy.
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"I think we should focus on individual tax rates because I think they are as important if not more important to consumers and to confidence," Mr Costello told Fairfax Media on the sidelines of this year's Couta Boat Classic at Sorrento in Victoria.
"Whatever the company tax rate is, if your individual tax rate is up around 50 per cent then it's still a big drag on growth.
"They've got to try and get the GDP growth rate above 3 per cent if we're going to absorb new entrants coming into the labour market; and I think we should look carefully at all the impediments to growth and get rid of them so we can lift the speed limit of the Australian economy."
Opposition attack
Acting Opposition leader Chris Bowen said Mr Costello's remarks showed the budget was off track. "You know Scott Morrison's 'jobs and growth' strategy is in trouble when he can't even convince Peter Costello of its merits or importance," he said.
Asked whether Australia should reduce personal tax rates as Mr Costello proposed, he said that while lowering marginal tax rates was important, particularly for middle income earners, it was not as important a priority as protecting the nation's triple-A credit rating and returning the Budget to surplus.
Treasurer Scott Morrison was unavailable for comment.
Mr Trump last month announced he would push to cut the company tax rate in the US to 15 per cent.
Business backs cuts
Qantas chairman Leigh Clifford, who was also among the 460 guests to take part in the boat race, called on the government to cut the company tax rate further.
"The world has moved in the last couple of years and a number of our competitors are moving to a lower-tax environment," Mr Clifford said.
"We've got to recognise that shuffling the deck chairs, or moving at the margin … is simply not enough when we're talking about the US going under 20 per cent.
"The question is, are the Parliament, the Senate and particularly the cross-bench willing to recognise where we sit with the deficit competitiveness of Australia?"
It was a view shared by former Reserve Bank of Australia board member and Nufarm chairman Donald McGauchie.
"We have to have competitive tax rates – both company tax and personal tax rates – because we have to have people willing to invest here and we have to have a competitive labour market," Mr McGauchie said.
Another concern was Mr Trump's trade policies, which KPMG Australia chairman Peter Nash said could put the Australian economy at risk.
"We're a trading nation and we need the largest economy to be open. If Trump is as aggressive as he's suggested in putting up the trade barriers that would be a real pain point for Australia."