Paul Drum, head of policy at CPA Australia, told AccountantsDaily that any 'deficit levy' based on income tax rates would be the wrong way to tackle the country’s budget deficit.
According to Mr Drum, around two thirds of Australia’s 2.4 million small businesses are unincorporated, meaning the ‘deficit levy’ would unfairly target their profits and impact their ability to grow.
“A deficit tax based on income tax rates, not the corporate rate, is going to affect the profits of 1.6 million businesses, and that’s without counting all the workers that it would impact,” he said.
Mr Drum said the tax would come at the expense of “productivity, economic growth and entrepreneurship in the small business and the unincorporated business sector”.
Rather than an increase in income tax, CPA Australia is calling for government policies that drive innovation and infrastructure spending while encouraging small businesses to increase productivity and be more competitive.
“Putting up the income tax rate is not going to help that,” Mr Drum said. “We need a plan for the future and it needs to be about increasing competitiveness and stimulating economic activity, growing jobs and boosting consumer confidence.
“They’re the things we need to see from the Budget, not more taxes.
“Our view is the best way to return Australia to surplus is to encourage productivity, to encourage entrepreneurship in business and to encourage jobs,” said Mr Drum.