The federal budget is a step in the right direction, but the tax cuts aimed at small businesses aren’t enough to deliver the kind of immediate lift in growth and investment the government will be hoping for, according to Yellow Brick Road (YBR) executive chairman Mark Bouris.
Bouris said the government should be focusing on driving economic activity in the short-term, and questioned how much the tax cuts aimed at small businesses, and the $20,000 tax write off for asset purchases, could have a meaningful impact on small business investment.
“I think for a 1% cut, or even a 5% cut, to a small business, it’s all bull****,” Bouris said. “They [small businesses] have got to make the profit in the first place. If you are making $100,000 a year and get a 1% tax cut, that’s $1,000. You think you’re going to reinvest that to employ tens of people? That’s a whole load of nonsense.”
His comments came at a post-budget roundtable of business leaders in Sydney this morning, hosted by Xero and moderated by Business Insider Australia’s editor-in-chief Paul Colgan.
While praising the government for improving on previous budgets in some respects, Bouris thinks it doesn’t go far enough. He said the main concern is about GDP growth over the next twelve months – a fear compounded by the RBA’s decision to cut interest rates to a record low yesterday.
“I think this is an improved thought process. The rhetoric implies an improved thought process. If you asked me I would say this is a 6/10 budget the most improved in terms of previous budgets,” said Bouris.
“It is heading in the right direction, but it’s not enough. We need something right now. And it’s definitely not enough for right now. What I am genuinely concerned about is that we will go backwards in terms of GDP over the next 12 months.”
There have been a lot of policies announced in the months since Malcolm Turnbull was made prime minister – the innovation statement contained a multitude of proposals, for example. But investors are sitting on the sidelines waiting for some of it to take effect. The tax breaks aimed at startups for example, which passed the Senate this morning, only go into effect from the 1st of July.
“Let’s start thinking about the revenue side. How can we get everyone in this country jumping up and down spending money, how do we get people investing money?” says Bouris.
“We’ve got to get the momentum into the businesses ASAP. The way you do that is say to the investors with the liquidity that you will get an advantage. What we will do is give you some kind of write-off.”
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