For Australian small businesses 2013 will be a big year. There’s a federal election, the dawn of what has been dubbed the “Asian Century” and industry leaders are committed to pushing for tax reforms, potentially spelling greater cashflows for small and medium businesses.
SmartCompany spoke to industry leaders to gauge their hopes for the policy changes they want to see in the coming year.
While they all had different views and opinions, key areas of change and reform include the need for a long-term agenda, cutting red tape and furthering trade relations between small businesses and Asia.
The need for a long-term small business agenda
CPA Australia business policy adviser Gavan Ord told SmartCompany the election should force politicians to focus more on policy and less on personal power politics, but the federal government’s preoccupation with the budget could inhibit the creation of long-term small business policies.
Ord says “the budget is essentially treated as an annual policy announcement, but we need an address that outlines policy for the year and beyond.”
Council of Small Business of Australia chief executive Peter Strong agreed a national action plan for small businesses was needed.
“By focusing on the short-term budget cycle we lose sight of the long term,” he said.
Communications Minister Stephen Conroy has in the past set clear goals for the development and rollout of the National Broadband Network and this approach, Strong believes, needs to be mirrored by business ministers when dealing with small business policy.
But head of economics and industry policy at the Australian Chamber of Commerce and Industry, Greg Evans, told SmartCompany small businesses must first have faith in the economy.
“First and foremost governments need to create a sound economic environment in order to restore small business confidence.
“They need to balance the budget and provide the Reserve Bank with the opportunity to balance inflations,” he says.
Tax reform and productivity offsets
Tax reform proved a passionate topic. Australian Retailers Association executive director Russell Zimmerman told SmartCompany payroll tax reductions were a necessary step in ensuring the viability of small businesses.
“The problem is we had a tax summit just over 12 months ago and lots of people attended, but the big problem is it’s been off limits for too long and it needs changing.
“Tax needs to be put out there and needs to be discussed in an open sensible way. If there are good reasons to make changes, changes that make more economic sense, then surely we should make those changes,” Zimmerman says.
In October 2011 the government held a tax summit in Canberra, but it left important issues such as the mining tax, the carbon tax and GST off the agenda, thus producing no major reforms.
Ord agrees, saying “a renewed focus on tax reform” is crucial for small businesses. He says three key changes are needed:
- A cut in the corporate tax rate
- Cuts to the personal tax rate
- The phasing out of inefficient state taxes
Evans also emphasises three key areas of tax reform:
- Lower personal income tax rates
- Change the design of the capital gains tax – don’t penalise for holding long-term assets
- Look at the impact of state-based transactions
These steps, he hopes, would lead to a reduction in the company tax rate, but acknowledges they are medium to long-term issues.
Evans laments the government’s ability to enact tax reform is hampered until the budget is restored.
In addition to tax cuts, Zimmerman highlights the need for productivity offsets for things such as increased superannuation contributions and the carbon tax.
“We’ve accepted the move from 9% to 12% superannuation, we realise it’s here to stay, but we’re looking for productivity offsets – wages need to be able to be reduced to account for superannuation contributions,” he says.
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