Small Business Tax Relief in Australia

6 Jan, 2014 | Articles

One doesn’t typically think of The Green’s as being the most pro-business political party in the country. But the Green’s small business tax policy – to cut the corporate tax rate on small business from 30% to 28% – is very much pro (small) business.

And whatsmore, this is really good policy. Small business is the driver 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 you are going to to have outsized returns in an economic sense.

Western Australia recently provided a “give back” of payroll tax 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 Green’s policy is that its not aggressive enough. It would be good to see small business in Australia have a sizeable cut in corporate tax to stimulate small business capital investment and job growth. Imagine the impact of a cut in small business corporate tax to 20%. The math is obviously not straight forward, but my guess is that the economic benefit that would flow from small business investment would far outweight the lost federal tax revenue.

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