SMEs warn the carbon tax will hit profits: Survey
Thursday, June 28, 2012/
The launch of the carbon tax on July 1 has SMEs worried, with the SmartCompany–WHK SME Directions Survey finding many were confused about the tax with only 51.6% of respondents saying they understood the impact of the tax on their business.
Of those who said they understood the impact, 57% said the tax would have a negative impact on their business profits, up from 42.8% in the previous SmartCompany-WHK SME Directions Survey.
This suggests that to a certain extent, SMEs may be working off fear rather than facts, given most business owners will have had little chance to work out the full impact of the carbon tax on company profits.
The carbon tax was the most mentioned item when SMEs were asked how the 2012 federal budget would harm entrepreneurs and their business.
The carbon tax also rocketed up the worry list, rising from eighth place to fifth place.
Tristan Webb, national tax director of WHK, told SmartCompany the survey results reflected the sentiment he was seeing amongst the advisory firm’s clients with the “vast majority” worried about the carbon tax.
“There is certainly a negative perception out there from our SME clients, but that is probably fed from a lack of real knowledge rather than any well-founded fears,” Webb says.
Webb says he has seen some clients impacted in “a very real way”, like an egg producer that supplies to big retailers, which was told the price of the egg packaging will increase by 5% as a result of the carbon tax.
The egg producer tried to pass on the increase to the big retailers and was given a categorical “no, you can’t do that”.
“There are people feeling squeezed like that. But for a lot of smaller businesses, they are not in a place to know what the impact will be,” says Webb.
Webb says a lot of SMES are not aware of government grants they may be eligible for to address the impact of the carbon tax.
“Because there are so many government grants out there and people don’t really know where to start, I think a lot of people are not taking the opportunities that may be available to them,” he says.
He also highlighted a lack of awareness about reporting obligations for larger SMEs.
“Bigger SMEs need to be aware of new reporting obligations, companies are required to report not just if they emit but also if they consume a high level of power (the threshold is 25,000 megawatt hours of electricity),” says Webb.
Looking at the data from the SmartCompany–WHK SME Directions Survey on an industry basis, the finance, education and construction sectors are the most comfortable with the impacts of the tax.
Most sectors expect a negative impact on profits, with the retail and agribusiness sectors the most concerned.
Retailers are in a particularly vulnerable position at the end of the supply chain as well as being reliant on stressed consumers, according to the Australian Retailers Association.
“Retailers are already experiencing tough trading conditions and poor sales and are now facing the introduction of a carbon tax which will hit business and consumer confidence at a time when relief is needed on both sides,” ARA executive director Russell Zimmerman said in a statement issued today by the association.
“The ARA is concerned not enough households will have the benefits of the proposed average $10.10 per week tax cut, and this will no doubt just be absorbed by the soaring cost of living.”
Zimmerman said consumers were not seeing relief and retailers would feel extra business pressure at the catchment point of costs borne along the supply chain due to the carbon tax.
“No compensation for retailers or small business will see them hit with direct and indirect increases in costs,” he said.