Economy

The business wishlist for budget ’08

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Return tonight and find out how the federal budget will affect entrepreneurs and business owners as SmartCompany reports direct from Parliament House.

Spend more to boost productivity, improve infrastructure and cut tax, but don’t fuel inflation. That is the core message business groups sent to Treasurer Wayne Swan in the lead up to tonight’s budget.

But it will not prove an easy task for Swan, who must juggle the need to take heat out of the economy with Labor’s commitment to deliver $31 billion worth of personal tax cuts and a predicted surge in wealth from the mining sector.

“This budget will be tough, but it will be fair,’’ Swan said at a press conference at Parliament this morning. “We are going to invest in public health, we are going to invest in education, we are going to invest in infrastructure.”

In addition to Labor’s list of pre-election promises, a combination of Government leaks and pre-budget rumour has helped identify several new items that are likely to form part of the budget, including:

  • A lift in the Medicare surcharge threshold to $100,000 for individuals and $150,000 for couples.
  • Increasing the tax on luxury cars from 25% to 33%.
  • Significant tightening of personal tax deductions and exemptions to save $8 billion over four years.
  • Possible means testing of some family welfare payments.
  • The abolition of the small business field officer program to save $7.5 million.

But business will be hoping for something more when Swan delivers the budget tonight.

Here is a run-down of the budget priorities nominated by Australia’s key business groups:

Australian Industry Group

  • Phased reduction in the company tax rate to 25%.
  • Government to boost the superannuation accounts of low income earners.
  • Build productivity through infrastructure spending and more funds for education, including a 5% boost in support for vocational education over the next decade.

Council of Small Business Organisations of Australia

  • Significant investment in small business support services, including Labor’s existing commitment for more funding to the nation’s business enterprise centres.
  • Measures to improve co-ordination by federal, state and local governments in the provision of small business support services.
  • New spending to be offset where possible by corresponding cuts to limit the budget’s inflationary impact.

Australian Chamber of Commerce and Industry

  • A reduction of the top marginal income tax rate to 30%, equal to the corporate rate.
  • A commitment to retain the current exemption from the requirements of the Privacy Act currently enjoyed by small businesses.
  • Increase the R&D tax concession from 125% to at least 150%.

Institute of Chartered Accountants in Australia

  • An alternative simplified taxation regime for small and medium sized businesses.
  • Review rules governing employee share schemes to make them a more accessible option for small business.
  • Reform to the fringe benefits tax regime so that benefits are taxed in the hands of employees rather than employers.

Australian Information Industry Association

  • A boost to the R&D tax concession from its current 125% to at least 150%.
  • Support for small and medium sized businesses in the sector, including reforms to government contracting procedures.
  • Recognition of the skills shortage facing ICT businesses and its broader impact on business productivity.

Business Council of Australia

  • Freeze real government spending over the next three years.
  • Invest resources in achieving genuine reform of federal-state relations.

 

How is the federal budget going to affect entrepreneurs, business owners and managers? Find out tonight with breaking news and ongoing analysis direct from Parliament House.

Australia’s best business journalists, including Amanda Gome, Robert Gottliebsen, James Thomson, Terry Hayes and Mike Preston will dissect and report on the issues that will directly affect your business.

Make sure you’ve registered for the free SmartCompany email alert to ensure you receive SmartCompany’s federal budget 2008 coverage.

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