Small business tax policy initiatives

6 January 2014

One doesn’t typically think of The Australian Greens as being the most pro-business political party in the country. But the Greens small business tax policy – to cut the corporate tax rate on small business from 30% to 28% – is very much pro (small) business. And what’s more, this is really good policy. Small businesses are the drivers of the national economy – a whopping 46% of private sector employment in Australia is from small business. It stands to reason that if you can stimulate this sector there will be outsized returns in an economic sense.

WA payroll tax

Western Australia recently initiated a payroll tax “give back” to small business and whilst it is too early to measure the impact on the local economy, the early signs are that small business confidence is up. The only complaint I have with the Greens policy is that it’s not aggressive enough. It would be good to see Australian small businesses receive a sizeable corporate tax cut to stimulate capital investment and job growth. Imagine the impact of a small business corporate tax cut to 20%! The math is obviously not straightforward, but my guess is that the economic benefit that would flow from business investments would far outweigh the lost revenue in federal taxes.