Tax cuts for small business need to be extended to all businesses to support job creation and investment otherwise the reform will become meaningless, Peter Strong, the CEO of COSBOA, said today.
Mr Strong said all businesses needed to share in a more competitive company tax rate as soon as possible to allow employers to make long-term plans to hire workers, grow their businesses and invest with confidence.
“If we don’t extend the tax cut to all businesses, the reduction for small and medium sized businesses will eventually become meaningless,’’ Mr Strong said.
“If the boards of big business have to make the best decision for their shareholders that means the best investment. If our tax rate is higher than other jurisdictions than those decisions will be about making less investment in Australia with less opportunity for small business people. That means less ability to create jobs.’ he said.
The company tax reduction for small and medium sized businesses was legislated last year. It will see the rate for businesses with a turnover of up to $50 million a year reduced from 30 per cent to 25 per cent over 10 years.
Mr Strong said small, medium and big businesses normally work well together and rely on each other. Activity in Australia between businesses – small, medium and big – is worth around $555 billion a year.
“It’s normally a good organic economic relationship, we need larger businesses to invest in infrastructure and new products and they need a lot of smaller businesses to provide services and expertise,’’ he said.
“For this to continue effectively, Australia must be internationally competitive. If we are a high taxing country then we will lose investment dollars to lower taxing nations, which would inhibit innovation and have a negative impact on jobs and wages.”
Mr Strong also repeated his calls for the Labor Party to abandon any plans to remove the already legislated tax cuts for small business.
“Small business people cannot plan with confidence if they are unsure about the future,’’ Mr Strong said.
COSBOA represents about 400,000 small businesses throughout Australia.