The Greens have made their most significant pitch ever for the votes of small business owners, unveiling a policy to cut the company tax rate from its current 30% to 28% for small businesses.
It’s part of a range of small business policy initiatives released this morning by Greens leader Christine Milne, which include raising the instant asset write-off threshold from $6500 to $10,000 a year, supporting the loss-carry-back provisions, and spending $10 million a year beefing up the resources and powers of the federal small business commissioner, which the Greens first tried to do in April this year (the measure was blocked by the two major parties).
The tax cut, which the Greens say would take effect before July 1, 2014, would be limited to those with turnover of less than $2 million a year. It would cost $1.75 billion over the next four years, and would be paid for by raising taxes on large businesses.
Senator Peter Whish-Wilson, the Greens’ small business spokesman, told SmartCompany that small business was the country’s most ignored business sector.
“We believe it’s the engine room of the economy. And it gets taken for granted because they don’t have the advocacy ability and the funds that big business groups have.”
Whish-Wilson said this was made clear by looking at the groups Prime Minister Kevin Rudd had met with since he returned to power. “He’s met with the Business Council of Australia, and he’s talked with the most powerful businesses in the country,” Whish-Wilson says. The Business Council of Australia represents the largest 100 businesses in Australia.
He said the tax cut was significant because it was the first ever Greens tax cut for the business sector: “And that’s because there’s a convincing argument that small business needs assistance.”
Whish-Wilson says the $2 million a year turnover figure was arrived at because it has been used by government agencies before and takes into account the majority of Australian small businesses. Of the 788,000 companies in Australia, 600,000 are small businesses with less than $2 million turnover, according to the Greens.
Asked whether the Greens would consider raising the $2 million threshold for the tax cut in the future, Whish-Wilson says they would “keep an open mind”.
Council of Small Business of Australia executive director Peter Strong says it’s always good when political parties and regulators recognise the difference between large and small business. Corporate tax rates are lower for small businesses in several countries, including France, Japan, South Korea, Spain, the United Kingdom and the United States.
“It can’t be a one-size-fits-all approach to business,” he says.
Strong said COSBOA would look at the Greens’ proposal and how it will operate.
He wasn’t concerned about the low turnover threshold: “Most small businesses turn over under $2 million.”
Yesterday, Coalition leader Tony Abbott also pitched a small business tax cut. The 1.5% cut to the corporate tax rate would apply to all companies from July 2015, but the 3200 largest businesses in Australia would be subjected to an additional tax to pay for the opposition’s maternity leave policy. This would leave Australia’s largest companies paying the same amount of tax overall, while small businesses would receive a tax cut.
Whish-Wilson said the Greens would keep an open mind about the Coalition’s policy.
“We’ll certainly negotiate with them. We support any relief for small business, and we would keep an open mind to talking with the Coalition about that.
“But as a party, we won’t support a tax cut to big business.”