A political brawl is brewing over small business with the federal government claiming the Coalition plans to get rid of $5 billion in tax benefits for small business.
Assistant Treasurer David Bradbury claims if a Tony Abbott-led government is elected in September it will reverse the increase in the instant asset write-off from $1,000 to $6,500, remove the accelerated initial deduction for motor vehicles and abolish the government’s loss carry-back scheme, measures which will cost small business $5 billion.
Under the Coalition, the government says 1.4 million small business owners will also face a tax hike when they lose the benefit they received from the increases in the tax-free threshold from $6,000 to $18,200.
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Bradbury says abolishing the instant asset write-off, motor vehicle deduction and loss carry-back scheme will cost small businesses $5 billion over four years.
“Abbott cannot pretend to be a friend to small business and then slug the sector with a $5 billion tax hike,” Bradbury said in a statement released yesterday.
“Abbott’s plan to increase taxes for three million of Australia’s hard working small businesses will have a direct impact on their capacity to grow their business and employ Australians.”
But the opposition’s small business spokesperson, Bruce Billson, hit back at the claims made by the government.
“Bradbury’s comments are a typical exaggeration and desperate unfounded claims that we can expect to see more of from Labor as the election approaches,” he told SmartCompany.
“To suggest that tax changes introduced off the back of tax hikes amount to a tax cut is just a con.
“The small business community knows that Labour has intentionally punished them with the carbon tax, has ripped away the entrepreneurs’ tax off-set and has shown little interest in the challenges the sector has faced as demonstrated by five ministers in 15 months.”
Billson claims the instant asset write-off is actually a rescheduling of depreciation allowances not a tax cut.
“Labor claims it is funded by the mining tax yet with that funding not available its future under Labor is in doubt. We’ve been clear that being economically responsible about tax cuts requires being able to fund them,” he says.
“The loss carry-back scheme was an initiative proposed by the Coalition as a timely response to the Global Financial Crisis that Labor rejected and now it belatedly shows an interest in this measure without explaining to small business the complex eligibility criteria that surround the measure as Labour has defined it.”
Billson was unable to provide further details about the Coalition’s policy.
“More details about the Coalition’s tax policy will be released in good time well before the election,” he says.