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Hanson's turnover tax a disaster for small business.



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MINISTER FOR WORKPLACE RELATIONS AND SMALL BUSINESS

LEADER OF THE HOUSE OF REPRESENTATIVES

 

PARLIAMENT HOUSE

CANBERRA ACT 2600

 

3 September 1998

118/98

 

HANSON’S TURNOVER TAX A DISASTER FOR SMALL BUSINESS

 

The One Nation plan for a 2 per cent turnover t ax would be an unmitigated disaster for the small business community.

 

According to today’s media reports, Ms Hanson is proposing a flat tax on turnover of 2 per cent to replace some existing taxes. This approach has been advocated by Mr J D McRobert in an article entitled “A Diet of 2 per cent can prevent heart attacks”.

 

This proposal has been analysed by Prof Neil Warren in advice given to the Coalition’s Tax Task Force. Prof Warren estimated that a 2 per cent turnover tax proposed by Mr McRobert would raise around $75 billion.

 

Ms Hanson’s latest “policy” is just another funny money scheme.

 

There are many objections to this form of tax. One strong objection is particularly relevant to the small business community.

 

A major problem with this type of turnover tax is that it can be easily avoided through vertical integration. For example, a large manufacturer which owned its own sources of supply and its own distribution network would be able to largely avoid the tax. Compare this to the position of small business. Because they are small, by definition they are unable to vertically integrate. This puts them at a major cost disadvantage to the larger, more integrated businesses.

 

This sort of problem is already encountered with the wholesale sales tax where the big supermarkets have an advantage over the small, independent retailers.

 

The benefit of a goods and services tax is that a credit is paid for all tax paid on the previous stages in the production and distribution process. Ms Hanson’s turnover taxes would only penalise small business. Small business needs a policy in which they pay less tax, not more tax.

 

For more information contact Ian Hanke: 0419 484 095

 

 

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