Federal Budget - Not So Good for Small Business
MELBOURNE – May 15, 2013: In an election year, the sixth Swan Budget does not promise a better economic outlook for small business owners. While VACC is not as hung up on a surplus as some others are, a huge deficit is nothing to be proud about and certainly will discourage many small business owners, who know the deficit has to be repaid at some stage.
Even though the spend on road and rail infrastructure is welcome, it comes with strings attached well into in the future. The spend on training and education is both welcome and very necessary.
The tendency of this Government to spend more and tax more is regrettable. Small business is all too often the target of new or increased taxes. Faced with this deficit, the Government, and the next, must review spending and not saddle the burden of debt on small business.
Small business confidence remains weak and depressed because of uncertainty and broken promises such as new carbon taxes, new mining taxes, and promises to cut company taxes have not been kept.
Time will only tell but, on the face of it, small business owners are unlikely to be encouraged to invest by this budget and will likely regard trading conditions as flat and unimproved.
Many small businesses are unincorporated and pay personal income tax not company tax. The Government should not focus entirely on company tax when thinking about small business. The company tax rate and personal income tax rate should be aligned. Reducing personal income tax should be a Government priority in the future.
Small business carries too much of the tax burden. Payroll tax is a particularly onerous tax and the Federal Government should take the lead and encourage the States to eventually eliminate this tax.
No one can argue about the national disability insurance scheme, the issue is how you pay for it. VACC is not so sure that simply increasing the Medicare Levy is the best option.
Given the poor state of some industry sectors, the next Government needs to have a good look at some of these areas and introduce structural adjustment programs to enable small businesses in these sectors to exit with dignity.
Coupled with this, Government procurement must include a greater level of local content. We have to do what other countries do in this regard.
With just five months to go to a Federal Election, the focus of small business is understandably not on this Budget, but on that defining event on 14 September 2013, which will decide the future Government.