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Fuel backflip scores poorly with business

AFTER completing a backflip routine that would make an Olympic gymnast proud, the Federal Govern-ment should have delivered all that small business wanted.

Small businesses complained the Business Activity Statement was too difficult, that the plan to tax trusts as companies would ruin them and that the February petrol excise hike was uncalled for.

As the dust settled on the corpses of two State Coalitions after two State elections, the Federal Government began its floor exercises.

First it announced that the Business Activity Statement could be simplified. Then the Government said it had decided its plan to tax non-discretionary trusts as comp-anies was unworkable and scrapped it.

Finally the Government decided its February fuel excise rise was indeed unnecessary and cut it by 1.5 cents per litre.

The Government has been levying a petrol excise for the past 17 years. About 50 per cent of the bowser price is made up of taxes.

It has also scrapped its bi-annual CPI index assessment. Normally the excise on petrol would be raised depending on the inflation rate as assessed in February and August.

The Government has ordered the Australian Competition and Consumer Commission to make sure petrol stations pass on the excise rise immediately.

Motor Trade Association of WA executive director Peter Fitzpatrick said the Government’s fuel flip meant $550 million back to small businesses and motorists.

“There is no doubt this move was driven by poll results. This is people power at work,” Mr Fitzpatrick said.

“The main benefit with this is the end of indexation twice a year. It means the Government will no longer be able to rely on petrol for general revenue.

“Petrol is an inflationary product. It reflects in most everything sold in the community. Taxing petrol at the rate the Government does is highly inflationary.

“The 1.5 cents per litre drop is a symbolic gesture. At least John Howard acknowledges he should not have charged that last increase on top of the GST.”

However, Mr Fitzpatrick believes the excise cut will have little effect on metropolitan petrol prices.

“There is a price support cycle in place. The oil companies may take the excise off their wholesale price but then they could reduce their price support,” he said.

Combined Small Business Associations of WA president Oliver Moon said the excise would have little effect for small business because of this.

“From COSBA’s point of view, the Prime Minister has done the right thing by removing the excise,” Mr Moon said.

“But we have to be realistic. The reality is it is big business that is ripping off small business.

“It is interesting when the Government hikes the petrol price up 1.5 cents per litre – there is a big hue and cry but there is little reaction when the petrol companies rise their wholesale price.”

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