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Business calls for NSW Budget to support jobs

Release Date: 7/06/2013
The Illawarra Business Chamber has outlined a five point plan of action for the upcoming NSW Budget to support jobs and grow the economy.

1. Abolish remaining Intergovernmental Agreement taxes to reduce the cost of buying and selling small businesses;
2. Increase payroll tax threshold to encourage small businesses to employ more staff;
3. Provide a tax rebate to business in cross-border regions to help them compete with Queensland and Victorian-based businesses;
4. Contribute to a trial of a small business credit guarantee scheme to help business secure finance needed to expand; and
5. Explore co-operation between Office of State Revenue and Australian Tax Office to reduce red tape and costs.

“The Illawarra Business Chamber is proposing some modest reforms that are affordable and that use existing pools of funding to support our goals of helping business through this difficult transition in the national economy and keeping Australians in jobs,” said Mr Mike Halloran, CEO, Illawarra Business Chamber.

Abolish remaining IGA taxes

“The NSW Government deferred the abolition of the Intergovernmental Agreement taxes (GST agreement) to fund its sign up to the Federal Government’s education reform package.

“These are some of the state’s most inefficient taxes which Victoria and Queensland have already abolished. Their continued deferral adds further costs by denying businesses a level playing field with other states.

“The NSW Government needs to honour its promise to the business community by abolishing these taxes.

Increase payroll tax threshold

“Payroll tax is a tax on jobs. It unfairly falls on businesses that are labour intensive and does not change to reflect the economic health of the business, unlike company tax.

“The Illawarra Business Chamber is proposing that the NSW Government divert the remaining funds in its payroll tax rebate scheme, which has had less than a 50% uptake, and use these surplus funds to increase the payroll tax threshold.

“Keeping as many businesses as possible out of the payroll tax trap is a positive step towards keeping employment steady.

Provide a tax rebate to business in cross-border regions

“NSW businesses along the Victorian and Queensland borders find themselves at a competitive disadvantage.

“If the NSW Government can’t make NSW’s tax system more competitive with other states then an alternative option is to provide a tax rebate for businesses along the border to reflect the lower taxes their cross-border competition are benefiting from.

“The Illawarra Business Chamber proposes that the NSW Government’s undersubscribed Regional Relocation Grants Scheme could provide the funding for a tax rebate for border businesses.

Contribute to a trial of a small business credit guarantee scheme

“Many businesses are struggling to get credit from financial institutions. That is a bad outcome if we want to grow the economy and create more jobs.

“The Illawarra Business Chamber is proposing that the NSW Government, together with the Federal Government, co-fund a trial of a credit guarantee, similar to that operating in the United Kingdom, to help more NSW businesses secure finance.

“In the UK, the government guarantees the losses of lenders up to 75% of the principal on loans up to a maximum of £250,000 in exchange for charging a fee to the borrower. An evaluation of the scheme has shown a net economic benefit to the UK economy – for every £1 contributed; there is a £1.05 return to the economy.

Explore co-operation between OSR and ATO

“The Illawarra Business Chamber has long advocated the benefits of the Office of State Revenue and Australian Tax Office pooling their resources and creating one collection point for taxation.

“Businesses currently deal with different rules and definitions and a multitude of red tape and compliance requirements when paying federal and state taxes. A central collection agency with single definitions would save businesses precious time and reduce compliance costs.”

The NSW Budget will be handed down by the Treasurer on 18 June.

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