The Turnbull government should be focusing more on small business during the tax reform process if it wants to get the economy firing, according to a tax expert at Bentleys Australia.
Malcolm Turnbull came to power promising to boost business confidence and prepare Australia for digital disruption but so far the political discussion has been dominated by the goods and services tax and superannuation reform.
The federal government is considering whether an increase to the GST will be a politically viable way to address the budget deficit or whether it would be more feasible to tackle superannuation tax incentives.
However David Spurritt, tax partner at Bentleys, told SmartCompany this morning the government should be spending more time and energy on examining how tax reform can benefit small businesses given they are the backbone of the economy.
“The tax reform discussion so far has really focused on personal tax, superannuation and GST, together with compensating people for an increase to the GST,” Spurritt says.
“It’s certainly timely for the views of SMEs to be included in this debate since 90% of businesses in Australia are SMEs and the main drivers of growth in this country.”
Spurritt says on the top of small businesses’ wishlist for tax reform are cuts in the corporate tax rate, removal of red tape and for something to be done about payroll tax.
“Each of these things is certainly important, particularly at the lower end,” he says.
“Compliance costs take up an extraordinary proportion of revenue. These are areas that could assist [small businesses] greatly.”
Small business groups says their members are generally supportive of an increase to the rate of the GST if it comes with tax sweeteners for business and leaves enough money in shoppers’ pockets.
Peter Strong, chief executive of the Council for Small Business Australia, told SmartCompany he understands why the government isn’t ruling things in or out, but small business will want some certainty sooner rather than later.
“The GST is going to, in theory, get rid of other taxes that make it harder for small business,” Strong says.
“But as soon as possible they’ve got to give us a date. What are the outcomes that would be guaranteed as a result of an increase? Can they guarantee the removal of payroll tax for anyone who employs less than 200?”
Strong says it is good that Labor is presenting the other side to the GST argument because it will make the government explain the outcomes of any potential increase.
“The GST is a means to an end,” he says.
“The outcome should be streamlining taxes. Most of us are unincorporated in small business, though, so if personal income tax drops, we win as all.”