Future of small business tax cuts in question as SMEs lose faith in pollies

Mathias Cormann

Treasurer Scott Morrison and Minister for Finance Senator Mathias Cormann ahead of Budget 2017. Source: AAP.

The future of the federal government’s small business tax cuts could be in doubt if Labor wins the next election, but business groups say SMEs don’t have a massive faith in either side of politics.

Last week Shadow Small Business Minister Senator Katy Gallagher said the 2017 federal budget was proof Malcolm Turnbull is happy to back the big end of town at the expense of tangible policies for SME owners, but over the weekend Shadow Treasurer Chris Bowen cast doubt on whether one popular small business policy would stay if Labor was elected to government.

Last month the government secured the first part of its 10-year plan to lower the corporate tax rate, lowering this to 27.5% for companies with annual turnover of less than $50 million.

The passing of the first part of the tax plan through the Senate means that from this financial year, businesses with annual turnover of up to $10 million will have their tax rate lowered to 27.5%. Companies with between $10 million to $25 million in annual turnover will have to wait until 2017-18 to see their rate drop to 27.5%, while those turning over between $25 million and $50 million each year will have to wait until 2018 to receive a tax cut.

Speaking on Sky News on Sunday about whether those cuts might be reversed under a Labor government, Bowen said Labor is “carefully looking at all options”.

Senator Gallagher later said the opposition’s position has been to support tax cuts for businesses with annual turnover of up to $2 million, and that SMEs would be told Labor’s position in the near future.

“I accept that, that there needs to be some certainty going forward … businesses absolutely will know in good time about our position going forward,” she said Sky News last night.

But small business groups are rejecting the idea that tax policy can be chopped and changed so readily, with Council of Small Business Australia chief executive Peter Strong saying creating uncertainty is no way to encourage employers to move casual positions into permanent ones.

“For certainty, you need to know what’s going on. As a business owner you can’t be sitting there and thinking, ‘do we have this, or not?'” he says.

While Strong said last week the business community was on the whole “very pleased” with the budget, when asked this morning whether SMEs have strong faith in any side of politics to advocate for them, the answer is a resounding “no”.

Meanwhile, the country’s two largest political polls have suggested Labor is well placed to take on the Coalition at the next election. While slipping slightly compared with the recent numbers, the latest Fairfax Ipsos poll places Labor ahead in two-party preferred stakes 53-47. This week’s Newspoll pegs a 2.5% swing to the Labor Party if an election were held today, predicting the opposition would win 82 seats.

The effects of the budget on Malcolm Turnbull and Bill Shorten’s popularity is less clear from the polls, with Ipsos seeing the Prime Minister’s approval rating jump five points, from 40% to 45%, compared with March. Ipsos has Bill Shorten’s approval rating at 42%, compared with 35% two months ago.

Newspoll shows a 13-point gap between the two leaders, with Turnbull’s approval rating sitting at 44%, compared with Bill Shorten’s 31%.

However, the big issue letting both sides down is a failure to talk about what’s going right, Strong says.

Much of the rhetoric around the budget focused on “this is not good enough, that is not good enough”, says Strong, who believes confidence would be better helped by discussing growth opportunities.smartcompany.com.au/…/atlassian-co-founder-mike-cannon-brookes-questions-if-the-innovation-agenda-is-dead

“One of the problems we have in Australia is that people keep talking down everything. Our economy is one of the best in the world, our holidays are good, and we really have a good economy. I think we have to start saying the truth on that,” he says.

In the lead-up to the budget, entrepreneurs, including Atlassian co-founder Mike Cannon-Brookes, questioned whether the fire had gone out of the government’s commitment to growth through its innovation agenda, while recent surveys of Australian SMEs indicate faith in the government’s ability to support smaller operators has slipped since the start of the year.

In April the Sensis Business Index Survey saw support for the Coalition slide into negative territory, with one in seven businesses reporting faith in the government’s policies.

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