Australian businesses have nominated a 4.9% reduction in the tax they pay as the amount they would need to improve their business prospects, according to new research released today by NAB. Businesses say they would use the extra money to invest in their business or hire additional staff rather than pay down debt.
These are just a couple of the findings of a special report released today by NAB Economics, which asks Australian businesses two key questions: what reduction in tax would be necessary to improve your business prospects and if you were given that level of tax relief, where would you focus those additional resources?
NAB Chief Customer Officer, Business and Private Banking, Anthony Healy said the research shows that a cut to the company tax rate can help SMEs grow their business.
“This research provides evidence of what we have suspected, which is that if we reduce the tax burden on SMEs they will invest the additional resources, which we know typically leads to economic activity, employment and higher wages” he said.
“More than half (52%) of Australian businesses say a tax cut would better secure their business prospects and that 4.9% was the sweet spot for the cut. Furthermore, over 90% said they would invest in the growth of their business either significantly, moderately or somewhat with the proceeds of the tax cut.
“However, a tax cut is only one part of fostering growth in the economy,” said Mr Healy.
“Australian businesses need to be entrepreneurs, not administrators. We need a far simpler tax system that gives business owners valuable time back to focus on what matters most to them”.
Typically the smaller the business the larger the tax cut sought (less than 100 employees 7.4 points, 100-200 employees 6.7 points and above 200 employees 6.1 points).
NAB Chief Economist, Alan Oster, said: “The findings of this report confirm what economic theory would suggest, which is that company tax cuts would result in increased business investment.
“This of course would have positive flow-on effects to employment and subsequently wages,” he said.
You can read the full report here or at business.nab.com.au.
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