Corporate Australia savages Budget
Corporate Australia has savaged the Federal Budget with WA's peak business lobby denouncing it last night as a "slap in the face".
The announcement of a "loss carry-back" tax scheme, under which companies will be able claim losses in a current year against tax paid in a previous year, failed to quell outrage over the decision to abandon cuts to the company tax rate.
And a change to tax rules to allow businesses to immediately write off up to $5000 for work vehicles and the cost of any asset worth up to $6500 was overshadowed by a perceived lack of a big picture vision for business.
The failure to reduce the company tax rate from 30 per cent to 29 per cent meant 90,000 businesses across the State would miss out on a tax break worth hundreds of millions, the WA Chamber of Commerce and Industry estimated.
CCI WA chief executive James Pearson blasted the about-face, which Treasurer Wayne Swan said was forced on him by the Liberal Party's opposition to the cut because it was to be funded by the minerals resource rent tax.
"The Government has broken its promise that some of the revenue generated by the tax would be re-directed back to the business community in the form of a one per cent cut to the company tax rate," Mr Pearson said.
"Instead, this is now being taken off business, and given away to households in the form of a one-off cash hand out."
Anticipated business tax incentives and benefits worth $4.6 billion had been stripped back to $900 million, he said.
"Business has every right to feel neglected at a time when many employers, particularly small businesses, are doing it tough," Mr Pearson said.
Australian Petroleum Production and Exploration Association chief executive David Byers said the Budget highlighted the impost the carbon tax was on business, with figures showing it would generate $25 billion between now and 2015-16.
"There remains an ongoing concern in the oil and gas industry that Australia is risking its reputation as a stable fiscal regime in which investors can commit to long-term decisions," he said.
Minerals Council of Australia chief executive Mitch Hooke said the Budget acknowledged the importance of the resources sector but failed to address the capacity constraints facing the industry.
Chamber of Minerals and Energy of WA chief executive Reg Howard-Smith said the Budget was "heavily premised on the strength and continued growth of the resources sector."
He welcomed news that the diesel fuel rebate would not be cut and warned against any further sudden policy changes.
"We therefore take the Treasurer at his word that there will be strong, detailed and genuine consultation to any further changes to the business tax system," he said.
PwC economics and policy partner Jeremy Thorpe said the budget lacked a roadmap for lifting productivity.
"This Budget is less focused on structural economic reform, productivity and growth oriented initiatives," he said.
"It does not substantially address recent concerns that domestic growth is softening, particularly in the non-mining sectors.
"The budget is more about how we carve the pie, rather than how we grow the pie."
KPMG chief economist Nicki Hutley said the budget "introduces a large number of small measures, rather than delivering a centrepiece reform."
Tax Institute president Ken Schurgott said business had been abandoned because of the decision not to cut the company tax rate.
He welcomed the tax loss carry back provision but blasted the decision not to simplify tax returns with standardised refunds.
The Actuaries Institute said the Government had missed an opportunity to address the serious problem of people outliving their retirement savings by failing to create a more vibrant annuities market.
