ACCI Press Release: Henry Tax Review

MEDIA RELEASE

Monday 8 February 2010

HENRY RESPONSE SHOULD ADDRESS SMALL BUSINESS CONCERNS

Statement by Greg Evans, Director of Economics and Industry Policy

The Henry Tax Review and the government response provide the best opportunity in over a decade to deliver substantive tax reform including lower taxes for smaller and medium sized enterprises across Australia.

Small business is essential to delivering sustainable economic recovery and job creation and the sector needs a tax system that provides the incentive for private business investment, encourages workforce participation and rewards risk taking and entrepreneurship.

Priorities need to include:

• reducing personal income tax rates and the number of thresholds, eliminating bracket creep and a commitment to gradually align the top marginal rate with the company tax rate;

• providing further capital gains tax (CGT) relief measures to ensure small business operators have the incentive to invest and risk their capital. Australia needs to move to a simpler stepped-rate system with reduced and eventually nil CGT applying on the sale of longer held assets;

• working towards the eventual abolition of payroll tax which is a tax on the jobs of all Australians. Payroll tax represents a major obstacle to the growth of small businesses, and creates a significant disincentive to increase employment;

• abolishing many of the state-based transaction taxes which are both inefficient and place cost imposts across business;

• implementing a depreciation regime, especially as it relates to larger capital items, which fosters investment and the upgrading of less efficient technology; and

• reducing the complexity in the taxation system, although this should not be viewed as a substitute for genuine and substantive reform initiatives.

The most pressing requirement for tax reform is to remain internationally competitive, however the tax regime applying to the SME sector is slipping behind the pack. It is also doubtful the global economic slowdown provides a buffer to enable Australia to relax the reform process.

ACCI is cognisant of the nation’s current fiscal circumstances. Accordingly, achieving the nation’s tax reform goals and maintaining our competitiveness may require spending cuts targeting inefficiencies and government waste.

ACCI has been supportive of the Henry Review process and considers that it should be accompanied by a ‘root and branch’ review of expenditure with a focus on the overall size of government.

ACCI represents over 350,000 businesses in every State and Territory and all industries. Our network employs around 4 million employees, ranging from the top 100 companies to tens of thousands of small and medium businesses.

www.acci.asn.au

For further information:

Greg Evans Director, Industry Policy & Economics 02 6273 2311 / 0407 204 559

Brett Hogan Director of Communications 03 9668 9950 / 0407 273 884