Small business advocates say small tax cut would create thousands of new jobs

Thousands of permanent jobs would be created and more than $11 billion pumped into the economy if political parties made a small business tax cut, experts say.

More than $11 billion could be pumped into the economy and 3300 new permanent jobs created with a modest cut to small business tax rates, with the sector’s peak body pressuring both major political parties to stop tinkering around the edges of tax reform and deliver a major boon for smaller players.

The huge economic benefits would flow if the small business tax rate was cut to 20 per cent from 25, new modelling by the Council of Small Business Organisations Australia (COSBOA) claims.

COSBOA CEO Luke Achterstraat said the election campaign so far had been devoid of major economic reform and a permanent change to the small and medium-sized business tax rate would boost the economy by up to $11.4 billion dollars and create up to 3370 permanent jobs.

“The modelling confirms what we have heard from countless small businesses across the country: a tax cut would boost small business cashflow, reignite investment and increase output, wages, jobs and economic growth,” he said.

“With two weeks of campaigning left, this policy is free to be adopted by the major parties as a clear path forward for small businesses across Australia … It is fiscally prudent, targeted and will produce a growth dividend in uncertain economic times.”

COSBOA CEO Luke Achterstraat said

The economic impacts of cutting tax were modelled across three scenarios: an immediate five per cent cut in 2025-2026, a phase-in to 20 per cent in 2027-2028, and a phase in to 2029-2030.

Under the first path, GDP would rise by $11.4b over five years, with about 3370 permanent jobs created in that period.

Mr Achterstraat said while both Labor and the Coalition had tabled policies to help small businesses, it was “quite targeted and limited in its scope”.

Serious barista generic, Picture: Getty Images

The Coalition over the weekend announced tiered tax rates for newly-formed small businesses, to go with previous pledges to make the instant asset write off permanent and introduce tax-deductible hospitality and entertainment expenses for small enterprises.

Labor meanwhile says its permanent tax cuts will help 1.5 million sole traders, while its six month rebate on energy bills will aid about one million small businesses.

While he welcomed those actions, Mr Achterstraat said a permanent overhaul of company tax would be a game-changer.

“We want to see enduring, structural reform — a substantial change to the company tax system would give small businesses a change of substance,” he said.

Originally published as Small business advocates say small tax cut would create thousands of new jobs