PayrollTaxI wrote a recent blog around payroll tax and why I think it is a tax that drives the wrong behaviours of small business owners.  This blog looks to present a solution to the myriad of small taxes that State Governments in Australia have and by removing them how it would literally save billions of dollars of time and lost productivity for small business owners.

Consider the following:

  • Each state has many small taxes ranging from payroll tax, stamp duty, land tax, emergency services levies and many others just to name a few
  • Each one of these taxes requires paperwork for small business owners to complete, numbers to reports on, systems to be set up and people or contractors to employ that add no value to the product or service that customers buy from these small businesses
  • Each tax takes precious time and energy of every small business away from adding value, innovating and delivering value to their clients.  Given that time and energy are your most important assets, anything that takes away from this is a distraction is criminal
  • Further, the people that are then employed by the public service to administer all these taxes not only adds cost to businesses  but more bureaucracy and wastage on taxes that could be put to better use in infrastructure projects or other value adding government initiatives.

The simple concept of raising the GST percentage to cover the shortfall that governments have by removing these small taxes would be a productivity game changer.  The additional money would pass from federal to state government to ensure they are not out of pocket, millions of hours and costs would be removed forever and you would be well on the way to lifting Australia’s productivity exponentially.  It would only need to be an additional couple of percent to cover the small taxes revenue.  I guarantee you if you asked small business owners which alternative they prefer, it will be an increase in the GST to forgo bureaucracy rather than many taxes which lots of reporting and wasted time.

Sounds simple doesn’t it? It is the art of simplicity in everything that is the hardest to achieve.  Less is more when it comes to everything in life.   I am sure there will be bureaucrats that pick holes in the logic described above but the tail should not wag the dog.  That is, the ripple of these small taxes in administration is significant for businesses that don’t need it.

You only have to see other jurisdictions such as New Zealand, Singapore, Hong Kong and the UAE where they have a flat rate taxation system on either revenue, income or goods and services and that is pretty much the one tax they have.  This allows business to really get on with being world class and adding value to the customers.

Let’s be bold and make these changes and free up our businesses so it is easy to do business with ourselves!