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Small business must check the fine print



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: JIJDIMOYLAN MP *Shadow Minister for Small Business & Shadow Minister Assisting the Leader on Women’s AffairsMember for Pearce MEDIA RELEASE36/95SMALL BUSINESS MUST CHECK THE FINE PRINTThe Keating Government's 13th Budget has delivered to family owned small business, which represent approximately 80 per cent o f all small businesses, a stinging blow that will further dampen business confidence, impact on consumer spending and significantly increase operating costs."The Government's projection o f a $718 million surplus is revealed as a sham, when compared to the Adjusted ABS Budget Deficit o f $8,232 billion. Likewise, there are few benefits for small business," said M rs Judi Moylan MP, Shadow Minister for Small Business."The outlook for the small business sector is clouded by:• a 3 per cent increase in the company tax rate, from 33 per cent to 36 per cent, which will impact on the 40 per cent o f incorporated small businesses;• sales tax increases for non-luxury passenger motor vehicles from 16 per cent to 21 per cent which will impact on the volume o f sales o f new vehicles, as well as increasing costs to small businesses who are big users o f motor vehicles. This is at a time when sales are under pressure from the external influences o f the rising Yen and sales declines. It will add approximately $1,000 to the cost o f a new car;a significant number o f small businesses associated with the production and sale o f new vehicles will be impacted by this sales tax increase;• the introduction o f a tax on housing, in the form o f a sales tax at the concessional rate o f 12 per cent. Based on a house price o f $100,000, this will add approximately $2,500 to the cost o f a new family home and significantly higher increases for more for expensive homes;• the tax on building products which will also apply to the commercial property sector, including business premises' fitouts, thereby spreading the damaging impact across all sectors o f the construction industry. Like the motor industry, the introduction o f sales tax, concessional otherwise, on housing and commercial construction will impact broadly on small businesses providing building inputs and support services;• burdening non-exempt small businesses utilising 'light' fuel oil with its inclusion in the diesel fuel excise, at a rate o f 28.4 cents per litre;MMONWEALTH W A R Y LIBRARY

• the adjustment o f the interest rate which the Reserve Bank o f Australia (RBA) pays on the non-callable deposits banks hold with the RBA will be set at 5 percentage points below the average yield o f the 13 week Treasury Notes. Small business borrowing costs will be under pressure as a result o f potential flow-on;

• increases in Australian Securities Commission c harges;

• the Fringe Benefits Tax (FBT) which will increase as a consequence o f the increase in the Medicare levy;

• the reduction o f labour market schemes outlined in Working Nation;

• the Government's snub o f small businesses repeated calls to have the Provisional Tax Uplift factor reduced in line with the rate o f inflation. This rate is to remain at the current level o f 8 per cent, 146 per cent higher than the Budget forecast for the underlying rate o f inflation o f 3.25 per cent. Small business may benefit from the

Government's consideration o f alternative payment arrangements for incorporated and unincorporated small business.

"Overall, small businesses will be disappointed by this high taxing, cost increasing and demand suppressing Budget. M r Keating has again failed to deliver an economic package that provides incentive for investment, growth and employment.

"The most disturbing news, is that for all the pain o f business tax increases, the real Budget deficit problems will not be fixed."

9 May, 1995 CA NBERRA C O N T A C T

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