One of the big four accounting firms has released the results of its pre-budget tax survey, revealing some surprising results including a dissatisfaction with the recent tax cuts.
Big 4 finds SME clients ‘extremely cautious'
Yesterday, KPMG Enterprise released the results of its first pre-budget Pulse Check. Out of 2,000 clients, almost two-thirds of those who responded expressed dissatisfaction with the government’s recent small business tax cuts.
Forty per cent of respondents said they would make no difference and 24 per cent said further cuts were needed to be truly effective.
KPMG Enterprise tax partner Brett Mitchell said that this result came as a surprise.
“We were definitely taken aback that the tax reduction for small business is viewed as either ineffective or not going far enough,” Mr Mitchell said.
“It was the government’s hope that this would act as a stimulus to SMEs to invest in technology or hire more staff, but this hasn’t been perceived as such, according to our survey.”
Further to this, over 40 per cent wanted to see an alignment or replacement of state taxes by creating broader-based federal taxes to simplify the tax system.
“It is evident that SMEs are calling for a simplification in the tax mix – the extent of state and federal taxes is viewed as burdensome and overcomplicated. More than half of our clients are calling for reform,” Mr Mitchell said.
“This is especially pertinent as other countries, such as the United Kingdom and the United States, are already engaged in broader-based tax reduction, which leaves Australia lagging behind.”
Another interesting result Mr Mitchell highlighted was that more than 50 per cent of respondents said they would be willing to have an increase to the GST rate if the additional revenue raised was spent on income tax cuts to stimulate productivity, or on infrastructure, particularly in regional areas.
“It is interesting that businesses would be prepared to accept a GST increase if the revenue were used for infrastructure projects or increased productivity through income tax cuts,” Mr Mitchell said.
“But the overwhelming tone of the survey is that the mid-market is feeling extremely cautious about the future.”