Tony Abbott’s administration has come under fire for regressive social policies and harsh treatment of social programs like welfare and public healthcare. However, he is trying to appeal to middle-class Australians by offering a 1.5% tax break for small businesses in Australia. The treasurer, Joe Hockey, announced this change with the annual budget commission. Although a 1.5% tax break seems minimal, this policy has certain far-reaching implications. This article is an overview of the tax break and what it might mean for the future.
First, it’s important to understand the scope of this budget cut. Although 1.5% doesn’t seem like much for an individual, it’s important to recognize that small business employ nearly half of Australia’s private sector workers. This break is intended to allow small businesses to take on more workers as a result of an increased budget. It might also offer small businesses who are living in the margins of their own profits a little breathing room to expand in a way that they need to or pay off interest or put down capital for a loan or something else.
Economists are saying that this new budget will promote growth in Australia’s economy. This makes sense, considering that thousands of dollars that were formerly going to go into taxes will now be spent potentially increasing labor and will be given to new hires at small businesses throughout the country. Treasurer Joe Hockey has expressed in interviews that it is the time to borrow and invest, whether you are part of a small business or not.
Although the actual financial viability of this suggestion is highly dependent on an individual or businesses circumstances, it is clear that the Australian government is trying to stimulate the economy from the middle, rather than from the top by offering tax cuts to big businesses or from the bottom by increasing their taxes and funding education or social programs. American businesses will be watching the results and hoping for a similar cut on our front.