The Beagle Editor,
So far the coalition’s proposed business tax cuts are high on the lists of reasons why voters did what they did last Saturday. Let’s hope that analysts, and voters, don’t blindly accept the political arguments for the business tax cuts as if they might be the best or only answers for the nation and that independently, they start do some sums on what the proposed tax cuts would really do towards stimulating the economy, creating jobs, improving business confidence for more investment etc. Hopefully, the sums will include the secondary impacts of significantly reduced business tax revenue and lower social security payments due to higher employment levels.
Simply put, businesses can only improve their profitability by increasing turnover and/or reducing expenses. Increased turnover will achieve all the good effects anticipated and won’t necessitate reduced business taxation revenue. Typical small businesses enjoying even small percentage increases in turnover will see higher percentage increases in their nett profit before tax – do the sums and see!
While government doesn’t need to implement the desperate stimulus measures taken to counter the effects of the GFC, introducing changes that will lead to small increases in the disposable income of taxpayers and pensioners will see a higher business turnover. Such “remedies” might include reduced personal taxation, preservation of penalty rates, indexing Medicare thresholds, indexing pensions and revising asset tests, being fair dinkum with child care and maternity leave payments, and so on the list goes with measures the political parties don’t see as common sense even if the electors do – as was evident perhaps last Saturday. As they say in the advert, “Simple!”, eh?
Jeff de Jager