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GST, tax reform and small business



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Mail Address: Secretariat: National Press Club 16 National Circuit PO Box E445

BARTON ACT 2600 KINGSTON ACT 2604

Tel: (02) 6273 3635 Fax: (02) 6273 2222

Chairman: Ian Baldock (07) 3352 6088 Chief Executive: Rob Bastian (02) 6239 4888 (A/H)

Council of Small Business Organisations of Australia Ltd ACN 008 597 304

Media Release 03/99 £ Friday, 21 May 1999

GST, TAX REFORM and SMALL BUSINESS Small business now believes the GST will cost them and that the Ralph review process will, on balance, work against them. ^

To recapture small business confidence in Tax Reform, the Government must:

1. Pay for the cost of providing Government Services. 2. Balance the Effective Tax Levels of Large and Small Business.

PAYMENT FOR GOVERNMENT SERVICES

Small Business can not reach economies of scale on Tax Administration. Nor can it continue to bear the costs of performing Government Services.

General Tax Administration and the GST

Option 1

All businesses should retain a proportion of the taxes they administer and collect ^starting at 10% and reducing with firm size to zero at $10,000 per month tax collected.

Option 2

Reduce the GST to 5% for the first $10,000 collected per month for labour intensive firms. (Similar to the proposal (99) 62 dated 17.02.99 currently with the European Commission).

Option 3 ~

Introduce UK style stepped rate Business Taxes.

Employment Related Government Services

Government must act to recover its employee related service costs from small business or:

Pay a direct service fee per full time employee equivalent, reducing in steps with the firm’s revenue on a scale yet to be agreed.

EFFECTIVE COMPANY TAX RATES

The difference in company tax rates between big and small business must be demonstrably reduced. Small business believes the Ralph process will increase them.

All quotes attributable to: Rob Bastian Telephone: 02 6273 3635

Chief Executive Facsimile: 02 6273 2222

COSBOA E-mail: rob@cosboa.com.au

Attachment 1 to COSBOA Media Release 03/99 21/5/99

x

FIGURE 1

Effective Company Tax Rates 1996-97

Small taxable company Large taxable company

Source: ATO Stats

FIGURE 3

Jobs and revenue in large and small business 1993-98

Source: IBIS/BRW

FIGURE 2

Compliance Costs - Small, Medium and Large Businesses

b u s in e s s

1,235 4,935

la rg e

Source ATAX

FIGURE 4

Jobs and revenue in large and small business (1997-98)

% 4

■ revenue growth

□job growth

Top 1000

Source: IBIS/BRW

FIGURE 5

For further details, contact:

Rob Bastian Chief Executive -

Council of Small Business Organisations of Australia Telephone: 02 6273 3635 Facsimile: 02 6273 2222

E-mail: rob@cosboa.com.au

Source: IBIS/BRW