Business

Qantas boss worried over fate of tax cut

Alan Joyce is concerned Australia will be less competitive if the company tax rate isn't lowered. (AAP)

Qantas chief executive Alan Joyce has warned the Australian economy could become less competitive if the company tax rate is not lowered.

Qantas chief Alan Joyce is concerned Australia will become less competitive and lose investment if the company tax rate is not lowered as the federal government plans.

"That will mean the economy will struggle here compared to the rest of the world, that will mean Qantas and other companies won't do as well," the airline boss told ABC radio on Thursday.

The Turnbull government wants to lower the company tax rate to 25 per cent for all businesses but its legislation looks like being blocked in the Senate.

Qantas has paid no corporate tax for close to 10 years, according to an expert analysis this week.

Mr Joyce explained the tax system allows companies to offset losses endured in previous years.

In the case of Qantas, it suffered losses after the 2008-2009 global financial crisis, which was followed by the impact of union disputes in 2011 and 2012, and then the impact high oil prices and a very strong Australian dollar in 2013.

"Last year we made $1.4 billion ... if we make that number again this year, we will be paying tax next year," Mr Joyce said.

The government argues that a tax cut for business will result in companies hiring more staff and offering higher wages.

Asked if there should be a social compact between business and workers to pledge higher wages in return for the tax cut, Mr Joyce said that was up to every company.

"The circumstances are different for everybody," he said.

At Qantas, during more profitable times in the last few years, Mr Joyce said staff have received three per cent pay increases, well above the rate of inflation and the national average.

Federal Labor argues the budget can't afford a business tax cut, and comes at a time when the government wants to lift taxes for individuals through an increase in the Medicare Levy to help pay for the national disability insurance scheme.

However, even the levy looks in trouble in the Senate with One Nation leader Pauline Hanson concerned about increasing the tax burden on low-income earners and costs blowing out in the NDIS.

"I'm still in discussions with the government over the NDIS scheme, but I've made it very clear that I have concerns with the system," Senator Hanson told the Australian Financial Review.

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