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Family First wants Small Business Minister in Cabinet.



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MEDIA RELEASE SF/65. Thursday June 8, 2006

FAMILY FIRST WANTS SMALL BUSINESS MINISTER IN CABINET

FAMILY FIRST wants the Government to acknowledge the importance of small business by making the Small Business Minister a Cabinet Minister.

The most important decisions are made around the Cabinet table yet the Small Business Minister - because they are a junior minister - isn’t there!

Announcing its small business policy today, FAMILY FIRST also wants: • Start-up small businesses exempt from paying tax for the first 3 years; • To cut red tape by simplifying the Business Activity Statement (BAS), so small businesses do not have to pay experts to complete it.

The small business policy announcement follows a small business forum Steve held yesterday in Melbourne with small business owners. Steve will meet regularly with the group to hear their concerns.

FAMILY FIRST is strongly pro-small business and last year took a strong stand against changes to the Trade Practices Act which would have made it even easier for big businesses to merge. Fortunately, the Bill was defeated.

A total of 97 per cent of businesses in Australia are small businesses (fewer than 20 employees) and many are family businesses. Small business employs 50 per cent of Australian workers, or about 3.6 million people.

The Government is not doing enough for small business which is why FAMILY FIRST wants:

1. Australia’s Small Business Minister to be in Cabinet. Small business deserves to have a Cabinet Minister represent them. There is a precedent. Peter Reith was in Cabinet as the Minister for Small Business from 1997 until 2001, but his successor was not in Cabinet.

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There is also no Department of Small Business and little in the way of statistical measures to help understand the vital contribution of small business to the economy, such as small business GDP.

The Prime Minister often says small business is “the engine room” of the economy and he is strongly committed to it. If he is serious, he will elevate the Small Business Minister's portfolio to a Cabinet portfolio.

2. Simplify the Business Activity Statement to recording the minimum information needed - GST collected and GST paid - as in New Zealand.

The BAS is one of the biggest complaints of small business. If the Government is serious about removing red tape, it should reduce the unnecessary information required in the BAS.

While the BAS form is only two pages, the Tax Office instruction booklet on how to complete it is 159 pages! No small business has time to wade through that. It is so complicated that businesses have to pay experts to do it for them, which they cannot afford.

The Statements are also confusing because they don't use standard definitions. For example, the definition of "total sales" in the BAS is different to the one used in income tax. So not only is the Tax Office collecting unnecessary information, it is often inaccurate.

3. Tax-free status for all start-up small businesses for the first three years, provided profits are reinvested in the business and turnover is below $1 million. New small businesses would pay no company tax, Capital Gains Tax or Fringe Benefits Tax. They would still pay GST.

FAMILY FIRST plans to conduct an investigation into the detail of how such a scheme would work, with a particular focus on ensuring it could not be abused by businesses seeking tax-free status beyond the 3-year limit.

Removing the tax burden would encourage small businesses to start, substantially reduce their compliance burden and help them with their cash flow during the difficult establishment phase.

Each year there are about 350,000 new small businesses. Almost one third of start-up small businesses fail within the first five years. Removing the tax burden will ensure more survive. Reinvested profits will boost small businesses and boost jobs, which is great news for Australia’s economy.

For media enquiries phone Chief of Staff Felicity Dargan on 0409 550 446