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State taxes tough on inner-city business

A recent report has thrown open the doors on the State tax system, exposing that NSW has the highest taxes on small business out of six Australian states reports Tara Cliffordin the South Sydney Herald of February 2009.

The study by the Institute of Public Affairs (IPA) uses a methodology that provides a single information source on tax burdens if a business has operated in different states. The findings reveal that there is less disposable income for NSW businesses to grow and so many may be encouraged to invest elsewhere.

One of the authors of the IPA study, Julie Novak, says: “With slow economic growth combined with high taxes, this is a double whammy for businesses.”

This outlook reflects the economic forecast by Access Economics, Austral ia’s premier economic consultant that NSW is now in recession. “It’s in the interest of the Government to make tax systems deliberately complex and hard to work out,” says Ms Novak.

The structure of the tax system affects business owners such as Redfern resident Richard Graham who is setting up a small business in tourism which requires a Hire Car licence. This is an annual upfront fee of $8,200 payable to the RTA. “This major cost has to be paid before the business has a chance to start making money,” says Mr Graham.

This view demonstrates the impact of the IPA’s findings that taxes do not take account of business profitability, and so inhibit economic growth.

According to Brian Adams, Chair of the Surry Hills Business Alliance: “The general feeling among business people is that this incompetent State Government is sending business to the wall. We simply cannot keep paying huge taxes with no return for monies paid.”

“If ever a tax revolution was due, it is now!” says Mr Adams.

Ms Novak believes that the report may provide such an opportunity. She says that informed businesses can push for reform, while the NSW Government can also use the report as inspiration to implement changes.

“Whether it does or not will have very important implications for the economy. If it does then it will kickstart business, economic growth and employment opportunities,” she said.

But Matt Lee, Vice President of the Redfern Waterloo Chamber of Commerce says: “There is nothing you can do. The  overnment is unyielding with the way they deal with you.”

This discouraged belief is also shared by Richard Ware, Vice President of the Glebe Chamber of Commerce and owner of Richard Ware Real Estate. “I think, unfortunately, they are too stupid,” says Mr Ware. “Being in business at the moment is very frustrating,” he said.

Source: South Sydney Herald February 2009