Tax Cuts or Band-Aid? SMEs Weigh the Impact of Labor’s New Cost of Living Measures

The Labor Government’s 2025 Federal Budget, with its promise of further personal income tax cuts, has sparked a debate within the Australian business community. While the government emphasizes the widespread benefits of these measures, firms like William Buck are calling for a more comprehensive approach to tax reform.

The government’s media release asserts that “Every Australian taxpayer gets another tax cut from next year – all 14 million, not just some.” The budget outlines a phased reduction in the 16% tax rate, lowering it to 15% from July 2026 and then to 14% from July 2027. This, they claim, will result in an average tax cut of “around $43 per week or more than $2,200 in 2026–27, and around $50 per week or more than $2,500 in 2027–28,” when combined with previous tax relief. 

Furthermore, the budget includes measures such as:

• Energy bill relief: An additional $150 rebate for small businesses to help manage rising energy costs.  
• Medicare levy low-income thresholds: Increased thresholds to benefit over a million low-income Australians
• PBS medicine cost reductions: Lowering the maximum co-payment to $25 per script.

These measures aim to alleviate cost-of-living pressures and provide targeted support to specific sectors. However, William Buck, a prominent accounting and advisory firm, expresses a critical perspective.  

“The budget’s provisions, including energy bill rebates and support for Australian producers, are acknowledged as positive steps. However, we believe a significant opportunity to overhaul the tax system was missed,” states William Buck. The firm argues that while these measures offer some relief, they fail to address the underlying complexities of the Australian tax system. 

William Buck emphasizes the need for “simplification and reform,” arguing that these are “crucial to fostering sustainable growth and ensuring the system works effectively for all Australians.” They contend that the government has “missed an opportunity to provide long-term relief to businesses across the country,” particularly with a looming election.  

The firm also points to the government’s forecast of “nearly a decade of deficits” as a cause for concern, suggesting that this will place an “ever-increasing tax burden on Australia’s younger generations.” This raises questions about the long-term sustainability of the government’s fiscal policies and their potential impact on future business conditions.

While the government highlights the benefits of its tax cuts, emphasizing that “our economic plan is all about helping Australians earn more and keep more of what they earn,” William Buck’s analysis suggests that a more systemic approach is needed. They propose that policymakers should “look at a broad reform of our system” to address the fundamental challenges facing Australian businesses.

For SMEs, this presents a complex picture. The immediate benefits of reduced tax burdens for employees and targeted support measures must be weighed against the potential for long-term fiscal challenges and the ongoing complexities of the tax system. William Buck’s perspective underscores the importance of advocating for broader tax reforms that can create a more efficient and sustainable business environment.  

Insight for SME Business Owners: While immediate cost-of-living measures are helpful, consider the long-term implications of the current fiscal policy. Engage with industry bodies and accounting professionals to advocate for comprehensive tax reforms that simplify the system and promote sustainable business growth.

The post Tax Cuts or Band-Aid? SMEs Weigh the Impact of Labor’s New Cost of Living Measures appeared first on Small Business Connections.