Brokers split on Turnbull tax reduction

Prime Minister Malcolm Turnbull has announced plans to cut the business tax rate by 5% - but brokers are split on whether they will see benefits.

In a speech to the National Press Club yesterday, Turnbull outlined plans to reduce business tax from 30% to 25% over the next decade. The plans, first announced in last year’s pre-election budget, aim to add 1% to economic growth when fully implemented.

Karen Hardy, principal broker of Acme Insurance Brokers, welcomed the news.

“I think this is great news for any business, including brokers, as the cost of running a business in Australia is outrageous due to our regulatory requirements and the high cost of wages,” Hardy told Insurance Business. “Any saving is good news.”

However, Hardy was quick to note that the decision was “not big enough to create a significant saving” and would make little difference to her business.

Want the latest insurance industry news first? Sign up for our completely free newsletter service now.

Robert Cooper, director of CPR Insurance Services, agreed with this assessment, saying that the tax cut “will have very little effect.”

“I do not see this as making any real difference for brokers,” Cooper continued. “No-one has put forward a convincing case for how this will create jobs or growth.”

Dale Hansen, chief executive officer of Austbrokers Coast to Coast, welcomed the proposal as “good news for our brokerage and the industry generally,” and noted that an effective reduction in income tax paid by businesses would allow brokers to do more.

Hansen noted that savings could be used to help develop electronic systems, processes and websites, or be used to bring on more staff or train existing staff members.
Hardy noted that a tax break for other businesses could have an unexpected knock-on effect on the insurance market in general.

“It may allow clients to spend a little more on their insurance programs to improve their covers,” Hardy continued.

Will the tax reduction help your brokerage? Let us know your thoughts in the comments below.


Related stories:
Turnbull government faces $3.7bn hole in NDIS funding
Farmers call for stamp duty consistency on multi-peril