The government announced a range of tax breaks for small businesses on the 4th of Feb. By and large this was all good stuff and if we weren’t in the throws of a deepening recession would have been received to tumultuous applause. Frankly the provisional tax penalty regime is an absolute crock, you get pinged because you earned more money than you thought – now that’s an incentive for growth. So by and large the package fixed a bunch of hygiene factors – stuff where improvement was needed but nothing that was reflected the new set of economic circumstances business face.
But i digress, i’ve been mulling over what would be something radical, something different that the govt could do from a tax point of view to stimulate business. So here it is…make equity investments in businesses tax deductible…particularly if the money is lost. Why do i suggest this? to stimulate the flow of private capital into businesses. Debt has dried up and institutional money has shrunk dramatically, so anything that makes more capital available and ensures the longevity and future prosperity of these business should be a good thing. I appreciate that i’m sailing very close to suggesting a Capital Gains tax regime here and maybe its time to have that debate as well. But that’s a topic for another day.
END RANT. Comments welcome.
