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Reader’s thoughts: Big business tax cuts a big waste of time

28 February 2018 3 minute readShare
Fiscal policy, tax, business

An anonymous My Business reader vents about the distorted view of company tax in Australia and why big business should sacrifice cuts in favour of bigger breaks for SMEs.

As a small business owner, I find ACCI’s [Australian Chamber of Commerce and Industry] special interest pleading contemptible and dishonest. Let[’s] get real:

  1. I buy supplies from ACCI members. I get no work or assistance from them. They need me, not the other way around.
  2. The prices I pay are inflated because ACCI members jockey for privileged status and protection from competition – which is what you expect from special interest advocates like ACCI. Why try competing when political donations and high-profile lobbyists are so much cheaper – and less work?
  3. I am a member of the SME community, and we have many more Australian employees than the ACCI. Why not listen to us for a change?
  4. Tax cuts for the big end of town do not help Australian investors – they have franking credits.
  5. Tax cuts help overseas-based companies who currently have to share some of the cost burden of Australian taxpayer funded benefits they take for granted – an educated workforce, the rule of law, IP protection and property rights, healthcare for workers, transport infrastructure etc.
  6. Overseas-based companies already take profits from selling into the Australian consumer market, and use transfer pricing to pay taxes where they get the best deal.
  7. Alternatively, they extract raw materials from the Australian resources bank and sell it where they get the best deal. They automate the process (fewer jobs) and pay minimal raw material costs (resource rentals, royalties etc) – again thanks to the political power of lobby groups, rather than well-designed policies that benefit Australians.
  8. As a small business I want things that require a reliable tax income:
  • a) A well-educated workforce. Less than 5 per cent of Australian educated workers applying for jobs with us are worth a second look, due to their poor educational and literacy standards.
  • b) A competitive banking system. We are so far from it – again, thanks to lobbyists.
  • c) A rational Worker’s Compensation system – New Zealand has a far better - universal - system for accident compensation, which covers everyone, not just legal jackpot winners. When they introduced the No Fault Scheme in the late 1960s, 25 per cent of lawyers lost their jobs. Oh, that’s another lobby group.
  • d) Workers who are not worried that their kids are home alone – like the Scandinavians seem to have mastered. High taxes? Don’t seem to have hurt their economies.
  • e) Properly managed and funded Healthcare, so the workforce has prompt attention to minor ailments that, left untreated, mean staff slow down or become unreliable attendees at work.
  • f) Competitive supply chains – not oligopolies that mean I have few choices of suppliers for everything from packaging, motor vehicles (again, NZ is far more competitive yet a fraction of our size), toll roads, airline tickets, or fuel (see how QLD fuel prices are being hiked at present, with no rationale other than “we can, so we do.”). Oh, yes, another big business lobby alert.
  • g) Maybe the most important and least mentioned – great leadership examples. Australian big business leaders are shocking examples to small business owners. Even more so when company boards recruit overseas (because they suck at it, not because there are not good leaders out there.) You may experience daily evidence that Sol trashed the NBN and Telstra’s future, but do you remember anything about that the telecoms giant in that period that provided a shining example of leadership? How about the privatisation of AMP, once a pillar of Australian-owned investment? Another overseas ‘leader’.

Australian managers (including me) are not nearly as good as some European management talent pools. We have poor skills training, (another fine mess), poor leadership, and poor rewards for anything other than jacking up the share price short term.

The litmus test? Australian businesses are not competitive when they try to go to other markets where the political protection racket is different. ANZ in Asia? Builders’ supplies in Britain? Or we think we can import the benefits of cheap labour markets – with 457 visas, that all too often put small businesses back at the beginning of the training and socialisation process.

Sorry, tax cuts for fat cats is a lazy shortcut to an illusory benefit, and shame on Australia’s politicians for the lassitude and ignorance of business that allows them to promote it.

Well, that’s my rant for the day!

Don’t give more special Australian tax breaks to shareholders of overseas-owned businesses, who pay little enough as it is.

Originally published as a comment to the My Business story titled ‘Big business needs tax cuts to support small business’.

Reader’s thoughts: Big business tax cuts a big waste of time
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Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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