As the federal government wishes to raise the GST to 15 percent, thus expanding its tax base, this decision will influence every small business in Australia. As a result, the Coalition will aim at diminishing the impact by providing a reduction in personal income and company tax. Still, that won’t delay the impact GST growth will have on the majority of Australian small businesses in particular.
It would appear that a 5 percent GST rise won’t have such a great impact on small businesses. But if you take a closer look, the reality is quite different. Let’s consider the costs associated with moving the office, the growth of utility costs, marketing and advertising costs, and others – all these costs encompass quite a lot. Small business owners affirm that the costs will be too high for a lot of people.
Impact on Small Businesses
The 15 percent GST raise will bring an addition of $130 billion to the federal government. This change will hopefully end funding-related disputes between the federal government and states, which is often accentuated.
At the moment, the country presents low consumption taxes, as compared to other countries. With the growth of GST, which ought to cover food, health and education services, this could lead to taxing the majority of goods and services available, as opposed to now, when only 47 percent of them are taxed.
Serious decisions for small business owners
Still, the problem is that a potential GST growth will present negative impacts on the majority of small businesses in Australia.
Rik Schnabel, owner of Life Beyond Limits, affirmed that the GST growth will lead to business owners taking a range of serious decisions. For instance, what option do they have at Life Beyond Limits: to raise the rates and in this way, possibly risk missing out business profit or give up $50.000 from profits before tax?
Schnabel also noted that the firm’s products are valued at somewhere around $2975. This would imminently involve moving on to $3000, adding up a mark or lose profits. He also affirmed that small business owners must make a range of critical decisions that will have unknown consequences. As an alternative to raising GST, Schnabel said that the government should consider reducing the number of politicians, saying that Australia is an over-governed country.
Exporters and importers
With the GST growth, the costs associated with exporting and importing will rise as well. Brent Vaughan, director of Multihull Central, who runs a yacht business, said that a considerable number of the company’s customers opts for international delivery to avoid having to pay duty and GST.
Multihull Central turned over $16 million in the last financial year, without the growth of GST. Still, with a potential rise in GST, the impact on the majority of small businesses will be major. To put it roughly, local businesses involved in this industry won’t have anything to benefit from this GST rise.
