The Australian Government’s decision not to extend a so-far unlegislated tax incentive has been widely criticised by business, which dismissed its pre-election Budget as a missed opportunity to revive the economy.
Australian Industry Group (AIG) said it was alarmed by the failure to continue the Instant Asset Write-Off (IAWO) scheme, which allows businesses to reduce tax by immediately deducting the cost of eligible assets rather than depreciating them over multiple years.
AIG CEO Innes Willox said the abolition of non-compete clauses was deeply concerning and the decision not to extend the apprentice incentive payment program to the manufacturing sector was unfortunate.
Describing it as a modest budget that would not “shift the economic dial”, Willox said the proposal to start cutting income tax at the bottom end of the salary bands was welcome. However, it did not represent tax reform or eradicate bracket creep.
He said forecasts of a A$42.1 billion (US$26.5 billion) deficit next year and a decade of deficits thereafter would be concerning given no clear path back to balance was outlined in the fiscal document, which was handed down ahead of an election due on 17 May.
“Sadly, the budget, while containing some commendable individual measures, fails the test of setting up Australia and Australians for prosperity at a time of major domestic and international challenges," Willox said in a statement.
Australian Chamber of Commerce and Industry (ACCI) Chief Executive Officer Andrew McKellar said the failure to extend the IAWO for small businesses compounded the failure to legislate it in the first place.
“It should be made a permanent feature of the tax system for investments worth up to $50,000 and available to businesses with an annual turnover of up to $50 million,” McKellar said in a media release.
He said the Government’s fiscal statement lacked strategy and vision and was particularly disappointing for small and medium-sized businesses.
Council of Small Business Organisations Australia CEO Luke Achterstraat said the Government had left millions of small businesses in limbo about the IAWO's future.
“Not only is this measure unaccounted for in the budget, but it is yet to even be legislated for this financial year,” Achterstraat said in a media release.
Business Council of Australia Chief Executive Bran Black said although the BCA welcomed personal tax cuts and the improved economic outlook, it was concerned about the forecast for persistent deficits and the increase in inflation which provided little fiscal buffer in uncertain global times.
“We need to nurture and grow our private sector more proactively because it’s ultimately businesses that generate economic growth and prosperity to raise the living standards of every Australian,” Black said in a media release.
His organisation would continue to call for the creation of the National Productivity Fund to boost growth and address economic challenges.
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