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Carbon Tax worries retailer, small business groups

July 14, 2011: Both the Australian Retailers Association (ARA) and small business association COSBOA have expressed deep concerns about the newly-announced Carbon Tax for Australia, with both calling for better modelling across all segments of business.

The ARA went so far as to say the tax ‘spelt disaster’ for the retail sector, as planned tax cuts failed to adequately compensate retailers for being the catchment point of price rises passed through the supply chain, while COSBOA is concerned that there has been no modelling to uncover the impact on small businesses (particularly energy-hungry ones, which would include pro labs and photo retailers running wet labs).
COSBOA says that immediately prior to the announcement of the Carbon Tax, more than half of all Australian small businesses (52 per cent) thought the economy is in worse shape than six months ago, and only one in five expects it to improve before 2012.

These findings come from the third Tesltra/COSBOA ‘Back to Business’ survey, which examined 1000 firms nationwide to get a mid-year pulse check of the small business community.

‘These findings came from research conducted before the carbon tax announcement,’ said COSBOA executive director, Peter Strong. ‘The confidence level of most small business people will have dropped even further. ‘

‘We need to either stop the C-Tax now or immediately get information out to small business people about the impact on them, their families and their businesses. We also need to change competition policy and workplace laws to ensure that competitiveness is maintained.’

‘We have asked for modelling to be completed across the various sectors of small business, particularly those in areas of high power usage,’ he said.

‘This is essential if confidence is to be rebuilt. The impact of extra red tape from the administration of Paid Parental Leave and changes in superannuation administration are also hitting hard. Let’s take the pressure off small business people instead of increasing it. Small business is in crisis, the government must use this announcement to focus on our needs.’

‘Big businesses have already said they will pass all costs onto small business people and then we will have to pass that onto the consumer.

‘Small business is going to be the point where carbon tax strikes hardest, and that is because of appalling competition policy, unfair contracts and leases…and a complete lack of understanding that a small business is a person not a robot or an automaton.;’

Mr Strong expects that the impact on Coles and Woolworths, Westfields and the like will be less than the impact on small business: ‘The gap in the two speed economy will widen, competition will decrease and jobs will be shed,’ said Mr Strong. ‘Big business will see this as an opportunity to improve profits at our expense.’

ARA executive director Russell Zimmerman said poor retail trade indicated consumers were already extremely price- sensitive, reigning in their spending due to increased pressure on household incomes and this will only increase due to the flow-on effects of the carbon tax as price impacts are passed through the supply chain culminating at the retail checkout.

‘Retailers are at the very end of the manufacturing and supply chain, and cost increases along the line will ultimately be caught by them. The Government’s planned Carbon Tax fails to offer retailers any compensation for being the catchment point for price rises, leaving them no choice but to pass these costs onto customers.

‘There are too many households that will miss out on any compensation at all as a result of an estimated $9.90 increase per week in the cost of living. Tax cuts averaging $10.10 per week for only 40 percent of households leave little margin for error, and don’t go far enough to absorb other costs people will face on top of household and utility costs such as the cost of consumer goods.

‘Retailers have concerns that the price impact on the cost of goods has been underestimated and industry needs to see more detail on how that modelling was determined,’ he said.

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