Budget shot in the arm for small business
The Government’s Corporate Tax Plan is a shot in the arm for the Queensland small business community and the broader economy, according to CCIQ policy advisor Michael Paparo.
Small businesses were undoubtedly the biggest winners from the 2016-17 Federal Budget delivered last week by Treasurer Scott Morrison (pictured below)
The Government’s announced 10-year Enterprise Tax Plan represents an investment in the future of 416,000 Queensland small and medium businesses that employ more than one million Queenslanders.
The Plan will provide an annual economic growth dividend (estimated at $160 billion over 10 years) that will boost small and medium business confidence, investment and jobs.
In addition, evidence from similar country tax reform experiences have shown that a cut in corporate tax rates raises real wages supporting a high standard of living for current and future generations of Australians alike.
The Plan is consistent with efforts in recent decades by both sides of politics to lower the Australian company tax rate. The statutory rate has fallen from 46 per cent in the mid-1980s to 27.5 per cent currently (for companies less than $10 million in annual turnover).
The Australian Treasury has consistently identified a lower company tax rate as central to Australia’s international business competitiveness.
Consecutive taxation reviews in Australia have made the case for a lower corporate tax rate to encourage capital flows considered crucial for Australia's long-term investment prospects, economic growth and employment. The Henry Tax Review in 2009 recommended that the company tax rate be reduced to 25 per cent over the short to medium term with the timing subject to economic and fiscal circumstances.
Recently however, some media commentators have argued that the costs of the corporate tax cut plan (forecast at $48.3 billion over 10 years) are a poor prioritisation of government policy and instead fiscal resources should be directed towards additional education and health spending.
In reality, the greatest risk to the tax reform debate is that Australia does nothing or reverts back to piecemeal ‘reform’ at the margin.
In this scenario Australia would be quickly left behind by other countries in our region such as Singapore, Hong Kong who have much more competitive tax systems.
The Queensland business community consistently identifies high federal business taxes as one of the biggest constraints on growth and the ability to invest and create jobs.
Comparable countries such as the United Kingdom and New Zealand have already implemented major tax reform since 2008 to the cheers of business owners in those countries.
Australian businesses risk being left behind in an increasingly globalised and competitive world.
Queensland’s continued prosperity will rely in part to the barriers to growth such as the ‘outdated’ taxation system being reformed.
This will ensure an even playing field allowing small businesses to successfully compete again businesses in other parts of the world with modern taxation systems.
The Chamber of Commerce & Industry Queensland (CCIQ) is committed to representing small business and ensuring that the taxation settings are right to provide businesses the confidence to grow, invest and create jobs.
CCIQ is continuing to actively participate in the tax reform debate.