Prioritise business tax cuts, says the mid-market
With just over two weeks to go before the May Federal Budget, KPMG Enterprise has received a clear message from mid-market clients interviewed in a pre-Budget Pulse Check: the government should focus on delivering business tax cuts.
Fifty two percent believe business tax cuts should be prioritised over personal tax cuts. There was strongest support for a high threshold, with almost half indicating companies with a turnover of up to $100 million should benefit from the tax reduction.
This is the second year KPMG Enterprise has run its pre-Budget poll. Clients were asked questions relating to the forthcoming budget with the opportunity to comment more broadly on current issues.
The prevailing mood from respondents is the Australian mid-market is worried about profitability and small business viability. Competitiveness, dealing with red tape and bureaucracy, the need for ongoing innovation and digitisation (24 percent) are the prime issues for small to medium sized businesses. They also believe Australia remains over-taxed and there is a desire for the government to push the innovation agenda even further than its current focus.
These findings are in line with a previous KPMG report , Keeping us up at night: the big issues facing business leaders in 2018, that concludes innovation and digital remain the number one concern of all Australian businesses when contemplating their prospects for growth.
The Pulse Check did show, however, that there was a pragmatic approach on personal tax cuts, with almost one in two respondents (46 percent) saying this should occur only after the Budget was in surplus. Thirty eight percent called for personal tax cuts in the next year while 15 percent believed personal tax rates should not be reduced at all.
Other key findings indicate the mid-market’s sources of vexation or unease remain constant. Notably, despite the government’s instant asset write-off rules promising more cash for SMEs, more than two thirds of respondents indicated they had not utilised the increased threshold, while the majority of those that had invested in new equipment or technology.
Respondents were uncertain whether current government incentives to encourage innovation in the business sector would impact future operations, with nearly half the respondents believing R&D incentives were not applicable to their businesses, and only 20 percent of the rest deeming them sufficient.
Australia’s mid-market is often referred to as the ‘engine room of the nation’s economy’. Employing nearly a quarter of all Australians and responsible for almost 40 percent of Australia’s business revenue, it is a key contributor to growth. KPMG Enterprise’s Pulse Check indicates, to remain competitive, the mid-market is calling for even greater support and recognition. It is asking the government to facilitate a more effective business environment that ignites mid-market growth.