Business lobby rejects proposed company tax overhaul

The Productivity Commission says its proposed tax changes would boost the economy by $14 billion. (Nikki Short/AAP PHOTOS)

Commerce groups have dismissed calls by the Productivity Commission for a new tax that would be offset by a cut in the rate paid by small business.

A report by the commission proposes cutting the income tax rate to 20 per cent for firms earning less than $1 billion while introducing a five per cent tax on cashflow, which it says would reap $14 billion without worsening budget sustainability.