Yesterday the Coalition announced its policy to cut the company tax rate by 1.5 per cent – but that was just the tip of the iceberg.
Not to be outdone, the Greens have appealed to the small business sector by unveiling their own new policy to cut the company tax rate from its current 30 per cent to 28 per cent for small businesses.
On its website the Greens say it will:
- Reduce the company tax rate for small business by 2 per cent;
- The tax cut will take effect from 1 July 2014;
- Cost $1.75 billion over the forward estimates.
The tax cut is part of a raft of small business policy announcements made by Greens leader Christine Milne this morning. In addition to the 2 per cent cut, Milne said the Greens also stand for raising the instant asset write-off threshold from $6,500 to $10,000 per year, unequivocally support the loss-carry-back provisions, and will spend some $10 million a year in allotting more resources to the federal small business commissioner portfolio. The Greens small business tax cuts policy can be viewed here.
Dawn of a new era?
According to one business leader in the SME sector, small-to-medium enterprises must get ready to make the most of a likely boost in consumer and business confidence following the federal election.
Garry Browne, managing director Stuart Alexander and Chair of the NSW Procurement Industry Advisory Group, said economic conditions are tough for small business, but the time to start making positive plans is now.
Browne pointed to a number of factors that should fuel confidence:
- This week’s cut in interest rates to help boost consumer spending.
- NAB’s head of business banking said on Monday that “demand for new [business] borrowings is stirring”.
- Dun & Bradstreet’s Business Expectations Survey found that “business confidence levels are showing signs of stabilising, with the year-end outlook for profits, sales, employment and capital investment beginning to level out”.
“The interesting finding from Dun & Bradstreet is that 38% of businesses are putting off business and investment decisions until after the election. This means we could see a surge in activity once we have new government installed and SMEs should ensure they are ready to make the most of this boost to confidence,” Browne said.
Browne said that if SMEs are to be their own ‘white knights’, there are six things that can be done right now to safeguard for the future:
Get tough: Tighten commercial contracts with customers/suppliers to protect and improve cash flow.
Invest in innovation: Spend more time and resources on brand building and looking beyond the present, in order to remain relevant and compelling to customers. “You can’t shrink your way to success – you need to take some measured risks quickly to capture growth opportunities”, Browne said.
Collaborate: Partner with other successful enterprises to share knowledge and insights.
Treat government as a customer: Develop a better understanding of doing business with government agencies and departments, including what to address in contracts and how to seek better terms when you negotiate (e.g. payment terms, reduced red tape in contracts). “Governments at all levels – federal, state and local – also have a responsibility to understand the commercial needs of SMEs, and treating them like partners – not suppliers whose payments can be delayed,” Browne said.
Invest in intelligence: Understand who your customer is, what they want and how best to engage with them. This requires a strong grasp of hard customer data and good relationships.
Don’t wait for a recovery: It is five years since the GFC, and new (non-mining) business investment shows no signs of picking up. “To use a surfing analogy, if you’re waiting for the perfect break, you may drown in the meantime – it’s time to paddle hard now,” Browne said.