WA small and medium-sized enterprises (SMEs) are overwhelmingly crying out for a more competitive tax rate for larger businesses to boost our state’s struggling economy, according to a survey conducted by CCI.
Almost 300 WA businesses were asked to give their view on the Federal Government’s proposed tax rate cut from 30 per cent to 25 per cent for businesses with a turnover of more than $50 million.
Sixty-eight of SMEs believe the cut would benefit the WA economy, 58 per cent said it would result in larger businesses taking on more workers and about a third indicated they would hire more workers and increase wages.
Australia’s top company tax rate is the fifth highest in the OECD and nine per cent higher than the average rate in Asia – our largest trading region.
More competitive globally
Seventy-two per cent of WA SMEs believe Australia would be more internationally competitive when attracting investment if the company tax rate for larger businesses was reduced and 71 per cent believe larger businesses would be more likely to increase local investment.
“Cutting the company tax rate for larger businesses is more important to WA SMEs than infrastructure funding, lower energy prices or a reliable NBN service, and here’s the kicker. This is despite these businesses already securing their own tax cut,” CCI CEO Chris Rodwell said.
“WA SMEs want the tax cut extended to larger businesses because they understand this will improve business conditions across the board and deliver jobs in communities across the nation. In WA, that type of boost is needed more than in any other state.”
Half of WA SMEs surveyed depend on the success of larger businesses for their own livelihood. For those businesses, extending company tax cuts is the most important issue ahead of the upcoming Federal election, second only to a stronger economy.
“Unfortunately, to date, the debate around company tax cuts has become a reflection of everything that’s wrong with politics today,” Rodwell said.
“Instead of tax cuts for larger businesses being seen for what they are – a way to get runs on the board for smaller businesses through increased investment in the supply chain – it’s become another issue to politicise and create class warfare.
“The WA economy is highly dependent on overseas investment. To ensure our businesses can get ahead and continue to employ four out of five West Australians, they must be freed from the tax chains that are weighing them down.”
“We know that the number one concern for WA business is a stronger economy and almost half (48 per cent) of SMEs believe cutting the top tax rate will flow through the supply chain, creating more profitable contracts for smaller businesses.
Mining sector crucial
The survey revealed that 70 per cent of WA mining businesses – WA’s lifeblood for decades – believe there should be tax cuts for larger businesses while 90 per cent believe it will benefit the WA economy.
“Attracting the scale of investment required to underpin new mining projects is a global game so it is crucial that our company tax rate is competitive to help create jobs in our state’s time of need,” Rodwell said.