A Carbon Tax Calculator in the language of small business people – cash flow!

By Peter Strong . On 23-Aug-2012

Why do we need a Carbon Tax Calculator? When discussing our businesses most of us small business folk talk about things that are important for our business on a day to day basis. Issues such as: rent and lease costs, cure wages, drugstore power, phones, internet, transport, depreciation and the like. Simple words and concepts whereas in big business they talk complex things such as tax differentials, multifactor productivity, corporatisation and privatisation of their operations, profit related drivers, regression analysis and so forth. (In small business a profit related driver is often ‘Mum’ doing the books and then driving the kids to their sport on the weekends.)

Try the Carbon Tax Calculator for Small Businesses

So because many policy makers and senior public executives prefer fancy words and lots of complexity, the discussions on the impact of the carbon tax on business have been all about big business and the debates have focused on what big business wants and needs.

We at COSBOA tried to assist to focus some of the debate on small business and we provided the relevant departments with an example of the turnover figures of a small business. That was fine except that, without consultation, that example became the basis for determining the impact of the carbon tax on all small businesses. That was a mistake.

Simply put the small business sector is broad and disparate and the impact of the carbon tax can differ from sector to sector and indeed from business to business. Also, and importantly, we want to know what the impact will be on OUR business. Many small business people I speak to ask “what will be the day to day increase in costs for my business?” A very fair question which is called good management.

We need information. We need it in our language. We need it now (we actually needed it 6 months ago). If that information cannot be provided than we need to be given the tools to work it out for ourselves.

These tools needs to be designed for people as everyone of us who runs a small business is a person. Big businesses are things with boards of management and all sorts of experts, and money to pay other experts, to help solve problems.

So we here at COSBOA have designed a carbon tax calculator to help the person in their own business work out the minimum cost increase that will come from the carbon tax. The calculator mainly uses figures from the government to help determine the increase in costs. In some cases we had to work out what the costs might be (ok ok we had an educated guess) particularly for “the cost of goods”.

I stress this is the minimum. Others will say that the costs will be more – if so ask them to help you prove that fact.

Cost of goods – Determining the impact of the carbon tax on cost of goods is not easy and we will only know after 6 moths, or even twelve months, when all the bills and invoices have arrived and we can work it all out. For many small businesses it will be easy as they do not have a complicated business, this includes local delivery drivers, most home based businesses, consultants and the like. For other businesses the calculation is complicated, this includes for many retailers, cafes, restaurants, convenience stores, chemists and manufacturers. Indeed the only way I can see to make a calculation is to consider the increase in power costs for suppliers and for other members of the supply chain and then determine what that increase would be as a percentage of their, the suppliers, overall costs. This would be either impossible or so time consuming as to be detrimental to our business. But on the other hand I have had opinion from business owners that the cost of goods will work itself out through the supply chain and the increase in costs will not be their problem as that will be determined by producers and wholesalers. The real concern is for those with a large power bill who have to work out how to pass that increased cost onto their customers.

Also (always something else) we have the problem of the big landlords and, potentially, the big franchisors passing on costs unfairly to the small business person. This is particularly important for small business people trapped in the small business slaughter houses called Westfields, Centro, QIC and the like. In these charnel houses the big end of town, the anchor tenants like Coles and Woolworths, get cheaper rent and, maybe (nobody really knows), cheaper electricity. When the landlords pass on the increase in costs coming from the carbon tax they will be likely to ask the small businesses to pay a bigger share than the larger businesses. This means that once again we get the short end of the tax stick – another example of the failure of the advisers on competition policy of the last twenty years (woops sorry have I mentioned competition policy – I withdraw that comment and will save other comments for a future blog).

Anyhow we now have a carbon tax calculator, it isn’t perfect but will certainly provide information on minimum costs. Any comments (nice constructive ones please) are welcome and any suggestions on improvements that can help a small business owner will also be welcome. But please no ideas and suggestions that are based on emotions and politics, those things get in the way of good business and in the end the small business community will make their political opinions heard at the next election because we all vote (2.5 million votes cannot be ignored) and for all their money and power and influence, in the end, big business doesn’t vote.

About the author

Peter Strong

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