ZERO TAX RATE FOR PRODUCTIVITY'S SAKE
The Institute of Public Accountants (IPA) has recommended that a lower or even, a zero tax rate for small business should be considered if Australia is to drive productivity and future economic viability.
This would mean that for at least a specific period the income tax rate for new small business start-ups would be zero. If we cannot currently afford a zero tax rate then the IPA supports a substantially reduced income tax rate.
The recommendation stems from the IPA’s Australian Small Business White Paper which puts forward a range of tax initiatives to assist small business.
“We recognise the Government has flagged tax cuts for small businesses to be further detailed in next week’s federal Budget; this will be a vital step forward if Australia is to protect the viability of the most critical sector to our economy,” said IPA chief executive officer, Andrew Conway.
“It must be recognised that the long term well being of the nation is dependent on the productivity and growth of the small business sector.
“Taxation and the associated regulatory burden is a key factor in strangling small business efficiency and productivity.
“If we remove the inefficiencies in the tax system and apply a much lower or zero tax rate to small business instead of multiple tax concessions, we would gain greater productivity and efficiency levels and a healthier economy.
“There would be significant scope to redirect some of the existing tax concessions to new start ups or entities in the early growth to encourage entrepreneurial behaviour, drive economic growth, as well as improve productivity and competitiveness,” said Mr Conway.