A powerful coalition of Australia’s peak industry bodies has launched a blunt warning against the Productivity Commission’s proposed cashflow tax.
The Alliance, which comprises 24 organisations including the Australian Retailers Association, claims it would push up prices at the checkout, worsen inflation and slow an already fragile economy.
The Alliance of Industry Associations said its concerns have intensified following the release of the Commission’s full report in December, arguing the tax would effectively hit every business and inevitably be passed on to consumers.
The result would be higher prices for groceries, fuel, essential services and everyday goods — at a time when Australians are already under intense cost-of-living pressure, the Alliance said. Retail-facing sectors warned they would be among the first to feel the impact, including supermarkets, convenience stores, fuel retailers and small businesses operating on tight margins.
According to the group, the proposed tax would add inflationary pressure just as policymakers are trying to bring inflation back under control, while also discouraging investment and weakening economic growth.
The Alliance described the cashflow tax as experimental and largely untested, warning it would impose an entirely new layer of taxation on Australian businesses.
International experience offers little comfort. Similar dual-tax models have been rejected outright in New Zealand, Sweden and Switzerland, while Mexico abandoned its system after it damaged household spending power and undermined business confidence.
While firmly opposing the cashflow tax, the Alliance welcomed the Productivity Commission’s recognition that Australia’s regulatory burden is stifling competitiveness, a concern shared across the retail, farming, transport and tourism supply chains.
The group backed recommendations for a whole-of-government commitment to regulatory reform, including clear targets to cut red tape, stronger monitoring, and well-defined principles for good regulation.
Those reforms, the Alliance said, are urgently needed. A recent AICD–Mandala report found federal regulation alone costs the economy $160 billion every year — costs that ultimately flow through to consumers via higher prices.
To drive real change, the Alliance renewed its call for governments at all levels to commit to a 25 per cent reduction in red tape across the economy, arguing it would help lower costs, ease inflationary pressure and improve living standards.
Retailers and small businesses, represented within the Alliance by groups such as the Australian Retailers Association, the Australasian Convenience and Petroleum Marketers Association and the Council of Small Business Organisations Australia, said red tape reduction would deliver immediate relief on the shop floor.
“Australia needs a stronger, more dynamic economy,” the Alliance said. “That will not be achieved through risky, untested taxes that push up prices and weigh on investment.”
The Alliance said it will continue advocating for practical, pro-growth reforms that support innovation, attract investment and lift productivity across the economy.