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Tuesday, 7 March 2000
Page: 14020


Mr LINDSAY (2:42 PM) —My question is addressed to the Minister for Employment, Workplace Relations and Small Business. Minister, what progress has been made in implementing the tax benefits for small business previously announced by the government? Is the minister aware of any alternative proposals for the taxation treatment of small business?


Mr REITH (Minister for Employment, Workplace Relations and Small Business) —I thank the member for Herbert for his question. I think it is appropriate also to note, Mr Speaker, that the member for Herbert is well known in this chamber as a great advocate for the ADF in Townsville. I think that is recognised on both sides of the House because he does do a good job for his constituents.

The government's tax reforms provide significant benefits to the small business community. In fact, the small business community has consistently been in favour of genuine and comprehensive tax reform for many years, including the introduction of a goods and services tax. They have also supported the very significant reductions in income tax which are included in the package. The small business community will be beneficiaries of those huge reductions in income tax. They have also been in favour of the abolition of the hidden indirect tax which the Labor Party has had in operation for many years—the wholesale sales tax. One of the reasons they are in favour of the abolition of the wholesale sales tax is that it takes the cost off business and, if you can reduce the cost of doing business, that provides a benefit not only to small business but also to the people that they employ. The small business community is also very much in favour of the abolition of provisional tax. Provisional tax has sent many businesses broke over the years. The abolition of provisional tax is the culmination of a long campaign by the small business community to achieve that objective.

When the government was first elected back in 1996, we had a committee look at reducing red tape. One of the recommendations of the committee, which comprised people from small business, was that we introduce a system known as pay as you go. The reason that small business sees that as reducing red tape is that it will see a reduction in the number of forms having to be filled out by small business down to one simplified, single system—the pay as you go system. So that is also a significant plus for the small business community.

Obviously, there are transition issues with the introduction of the new package, and for that reason the government has set about the biggest information and education campaign for a tax change in Australia's history. There have been literally thousands of seminars, and a whole range of services provided, particularly to small business, to enable them to make that change. An amount of $500 million has been set aside for that task and, on top of that, $175 million as the benefit to small business from immediate tax deductibility of items purchased as they get set up for the GST.

I think the small business community would be aghast to now find out that, if the Labor Party were ever to be elected, the first thing they would do would be to move what they call a series of changes or roll-backs to the GST, adding significantly to the compliance costs for the small business community. After running around the country saying that they are concerned about small business and red tape, their policy is in fact to load them up with a whole lot of red tape if ever they are elected. To add insult to injury, it is the Labor Party's policy to pay for the deal they have offered to the state premiers with an increase in income tax. Who do you think is going to pay the increase in income tax? None other than small business. Not only will it affect them in respect of income tax; whilst this government has been reducing capital gains tax, the Labor Party's increases in income tax will mean increases in capital gains tax for the small business community.

One of the best things we have done was to halve capital gains tax. Now it is Labor Party policy to put it up. The small business community is part of the great dynamic of the Australian economy, creating jobs. In the end, if we look after small business, we get more jobs and we get higher living standards. Our policy supports them. It seems, again, that Labor's policy is to tax small business.