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Labor has rejected co-operating with the Coalition on boosting the goods and services tax, whatever the outcome of next year's tax white paper and negotiations with the states.
Addressing the Australian Financial Review tax summit in Sydney, Labor treasury spokesman Chris Bowen said while any GST rise would be permanent, any income tax cuts funded by it would be eaten away by bracket creep.
"Are we really going to increase the GST every time the nation needs to deal with bracket creep?" he asked. There were as many as five suggestions for what to do with any extra GST, among them funding state budgets, cutting the deficit and cutting company tax. Only one could be afforded.
"It's like when you get a raise in your salary and you think of five things you'd love to do with the extra money," he said. "Deep down you know you can only do one."
But Labor was prepared to negotiate with the Coalition on cutting the company tax rate.
Asked if he agreed that company tax was ultimately borne by a firm's employees rather than its owners, Mr Bowen replied: "It is a statement of fact which I agree with.
"I would like to see the corporate tax rate come down over time. I have previously said the nation should be aiming for a 25 per cent corporate tax rate."
BHP defended its tax record at the conference, saying it paid more than the Australian statutory rate of 30 per cent, and paid 35 per cent when royalties were included.
Last year it booked $60 billion of revenue in Australia and only $1 billion in the low-tax jurisdiction of Singapore. Much of that faced top-up tax in Australia at a rate of 58 per cent.
"We support measures to crack down on base erosion and profit shifting. We support it even though it is going to cost us more money in compliance," BHP's head of tax, Jane Michie, said. "That's not because we are altruistic; it's because we are realistic. There's a growing consensus things have to change."
On Wednesday, BHP will release a complete account of its tax payments broken down by commodity and country.
Tax expert Greg Smith, who was a member of the Henry tax review, said Australia shouldn't bother trying to compete on corporate tax rates with countries such as Singapore and Britain with rates below 20 per cent.
"There's no doubt in my mind that Australia cannot chase footloose investment as its strategy," he said. "To do that you've got to go to 15 per cent. You'll blow your political equation way before you get there."
Economist Saul Eslake said there were clues to Malcolm Turnbull's approach to tax in one of his speeches given soon after he became an MP 10 years ago. He called for lower income tax rates and a broader base. That would mean fewer exemptions, disproportionately used by high-income earners.
"Australia's personal income tax base is like a giant Swiss cheese, riddled with holes that allow people to pay less tax on particular types of income," Mr Eslake said.
