Tax reductions earned plaudits from the business community, with the budget's cuts in both tax company and income tax burdens likely to inspire confidence, particularly in Western Australia.
Tax reductions earned plaudits from the business community, with the budget's cuts in both tax company and income tax burdens likely to inspire confidence, particularly in Western Australia.
Chamber of Commerce and Industry of WA chief executive Deidre Willmott said the chamber was particularly pleased by the increase of the small business tax threshold to $10 million.
The company tax cut package would be particularly welcome in WA, she said, where confidence was low as the mining boom unwound.
She hoped it would combine with the interest rate reduction today to boost cash flow and support job creation.
Ms Willmott was also pleased that Perth was officially now considered the nation’s second shipbuilding hub.
The state’s shipbuiding industry was globally competitive, she said, with a strong record of exporting.
Kikka Capital chief executive David Brennan said lowering business tax rates was strongly supported by his team.
"We look to fund the growth of businesses who are reinvesting in their enterprise so any additional supply of capital within the business be it tax savings or revenue ultimately contributes to growth of the sector in general,” he said.
“Shifting the turnover limit for access to the $20k immediate write off is also a boon, that should encourage medium size business to invest and Kikka can help fund that.
“The government’s move to reduce the disclosure requirements of ESOP’s (employee share scheme) is well supported by us, we have personally witnessed the tremendous benefit such programs have on attracting and retaining highly talented employees by aligning both the companies and employees interest in the form of exposure to the value created when striving for a common goal.”
Cloud-based eLearning portal Velpic chief executive Russell Francis said he was pleased by the allocation of an additional $18.8 million over five years to to make it easier for SMEs and start-ups to sell to government.
"This is a huge initiative given one of the biggest spenders on ICT in Australia is the government,” he said.
“To date startups have been locked out of this via red tape, nepotism and and the old ‘you don't get fired for buying IBM’ mentality.
Consult Australia chief executive Megan Motto said the economy was still shaky.
“The budget position might be relatively strong in global terms but it has deteriorated since MYFEO, and this budget acknowledges the difficult path to surplus,” she said.
‘‘The budget papers and rhetoric make no mention of the diminishing dependency ratio or the challenge of our transitioning economy in volatile times.
“However, the budget lays the groundwork for enhanced confidence amongst the business community, increased international competitiveness, and renewed energy to combat youth unemployment. Tax breaks for middle(ish) Australians are also welcome.’’
Ms Motto said it was a fair budget and would be seen as such in the upcoming election, and gave the tick of approval to the Smart Cities plan.
However KPMG national managing partner tax David Linke said the federal government had lost an opportunity to reform consumption taxation, which he said was at least five years away.
“We welcome the proposed reduction in the corporate tax rate to 25 per cent but transitioning it over an eleven-year period is likely to result in Australia falling further behind the tax rates of other capital-importing countries,” he said.
“Increased foreign investment is particularly important for our living standards in the future.
“It cannot be stated often enough that a significant portion of the benefit of a reduction in the company tax rate flows through to higher real wages.
“This measure will ultimately give businesses greater incentive to invest.
“All-in-all, what has been lost in the federal government’s economic plan is the opportunity for grand tax reform including a review of consumption taxation.
“One cannot see this happening for at least five years and possibly a decade.
“This is what we truly need.
“On bracket creep, the government has gone with an adjustment to one bracket so that someone on average full time earnings does not creep into the second highest bracket.
“While this is welcome, more fundamental reform to the personal tax and transfer system needs to be undertaken.”
Retail Council chairman Peter Birtles said the budget would not damage confidence for either businesses or consumers.
“Personal income tax cuts and company tax cuts for small and medium businesses announced tonight should help business conditions and stimulate economic activity,” he said.
“We are encouraged by the government’s commitment to reduce the company tax rate for all businesses.
“However, we are disappointed that these measures will take a decade to implement – particularly as those companies that must wait the longest are the very companies that employ a high proportion of the workforce and make a significant contribution to economic output.
“Furthermore it delays the flow-on benefits delivered to Australian households who would also benefit from a reduction in the company tax rate, primarily through higher real wages and increased employment.
The Retail Council is encouraged by the continued commitment of the government to take careful and necessary steps to move the budget to a more sustainable path. The government must now continue to clearly communicate the tax and benefit changes to ensure the Budget does not cause any crimping of activity across the economy."
