The federal budget has been officially released by Treasurer Joe Hockey, and the news is relatively positive for retailers in Australia.
Primarily, those who own small to medium-sized enterprises will benefit from the government’s decision to reduce Company Tax by 1.5 per cent. With the tax rate down to 28.5 per cent, business owners may find they are able to access more cashflow, which they can then reinvest in expansion and growth.
However, Australia’s largest industry bodies – the Australian National Retailers’ Association (ANRA) and Australian Retailers Association (ARA) – have expressed concerns about the rising taxes in other sectors.
While ARA Executive Director Russell Zimmerman supported the government’s desire to reduce spending, he believes curbing the government’s budget may also impact on household spending and consumer sentiment.
“We are only just beginning to see retail and the services sector regain momentum after many years in the doldrums. It would be a travesty if these tax increases impacted on that recovery to the sector and the services economy,” he said in a May 13 statement.
ANRA Chief Executive Margy Osmond agreed with Mr Zimmerman’s concerns, sharing her belief that the budget may undo 11 consecutive months of retail sale growth.
“Retail needs a good economic base from which to grow, and any cuts that eat into household spending will damage that base in the short term. However, retailers recognise there is a need for fiscal discipline if the economy is to prosper in the long term,” she explained.
Another major concern for retailers in Australia is the rise in fuel excise, expected to impact fuel prices in the next financial year.
“The increase in fuel excise will generate a multitude of cost pressures for retailers – including rising transportation and freight costs as well as a hit to consumers’ hip pockets,” Ms Osmond revealed.
However, as the government plans to use this tax increase to help fund future road infrastructure projects, retail expertsunderstand that the fuel excise is a necessary burden on business owners and consumers.
“In the longer term, the dedicated road infrastructure investment will provide a better transport network to large scale logistic operators like retailers. The jobs associated with this infrastructure will also mean a brighter future for a number of communities and their retail businesses,” Ms Osmond concluded.