Everyone Benefits from a Different Approach to Taxation

Date posted: March 9, 2016

With tax reform high on the agenda for both the Federal Government and the Opposition, media reporting on the subject is prolific as both sides square off against each other. An increase in the GST has been the main topic of conversation, with the promise of both personal and company tax rate reductions being considered as a counter to the increase in consumer goods and services.

The latest news is that the proposed GST increase has been shelved, and further discussion regarding tax rate reductions also appears to be losing momentum. This leaves economic activity in a state of uncertainty as businesses find forward planning more and more difficult.

Lower Taxes Provide Several Benefits

Every thinking citizen of the country understands the need for taxation to provide essential services; however, when the tax rate is too high it stifles growth. The Reay Services Group provides piping and trenching services to the mining and resources industries so we are very aware of the flow-on effect to companies such as ours. Lower taxes not only benefit us, but also the client companies that are the source of our work and, therefore, our income.

Superannuation Funds Invest in Resources Companies

The benefits to our industry come in several ways. When our clients pay less tax through lower tax rates, they have more profit to distribute to their shareholders. Many of the shareholders are superannuation trusts, so these additional funds are helping to fund the retirement incomes of future generations.

More Capital Available for New Machinery

Our industry is capital intensive, so surplus income from lower taxes is available to fund the purchase of new equipment and continue the exploration of existing mining leases. Continually investing in new and better machinery is essential to maintain the efficiency of mining in Australia, which is some of the most cost effective in the world.

Subcontractors Have a Steady Flow of Work

This activity then flows through the economy to companies like ours. With the capital to continue working existing mines and opening new ones, our clients are able to provide us with work to keep our operations profitable. At our end of the economic pipeline, when we pay less tax as a result of lower tax rates, we are more profitable. This means we can offer better wages and conditions to attract the best, most skilled plant operators and other staff and acquire the safest, most efficient equipment.

Employees Benefit Through More Disposable Income

Lower personal taxes also benefit our employees, giving them more disposable income which then circulates throughout the general economy. Because we operate in regional and remote areas of the country, our people spend their wages in these towns, making a significant contribution to local economies that struggle to survive without our presence.

Tax reform with lower taxes at the centre is the impetus needed to move the economy forward. This allows Reay Services Group to continue providing employment and services to our industry clients.