Sunday, July 17, 2011

Significance of Carbon Tax for SMEs

Carbon Tax: What it means for SMEs

The increase to the instant asset tax write-off from $5000 to $6500 was recently imposed by the government to make the companies that belong to the Top 500 most polluting pay a carbon tax of $23 per tonne from July next year.

Last Sunday, Prime Minister Julia Gillard announced one of the biggest changes to the Australian economy since the GST was introduced. This is ensuring that July 10, 2011 will become “Carbon Sunday”. This means that beginning July 1, there will be a new set of rules that will impact the business landscape. Carbon Sunday is believed to have tangible results in reducing emissions and positive effects on the environment.

“The direct impact of the announced policies will be positive for most businesses” is MYOB’s CEO, Tim Reed’s, belief in the new changes. The carbon tax will only be charged to the top 500 emitting businesses. Therefore, it will be business as usual for other small businesses.

This new tax serves as a welcome relief for small businesses as this is the first policy that is implemented in Australia that does not impose any extra paperworks for them.

With the influx of workers into the employment market, it will now be easier for small businesses to employ more workers where the workers may no longer need to pay taxes.

But the question is why small businesses have hit a 15 year low confidence in the federal government with the Carbon tax?

This is because SMEs did not fully understand the Carbon tax and have thought that it would impose negative impacts on them. The proposed change to an emissions trading scheme in 2015 made them also apprehensive.

The retail and travel sector are also moving with caution. Even though there is a threat by off-shore competition, retailers believe that they will have to pass on the higher costs to the customers. Bernie Brookes, Myer chief, suggests that operating costs for the retail giants will be likely increasing by between $3-6 million.

The domestic tourism industry is also facing the same thing. And again, the higher costs will be passed on to the consumers. However, it is also seen that this tax will boost the confidence of consumers that will likely result to spending more.

The government is also being accused by commentators of leaving small businesses to fend for themselves. Very little has been done to assess Australia’s 2 million SME and their impacts.

There are still two years left before the elections. That is why the carbon tax is here to stay. For SME’s, the best thing to do is to understand what carbon tax really means.

Source: DynamicBusiness »

No comments:

Post a Comment