Sydney’s Pitt Street Mall.
With last year’s retail trade figures averaging a 2.76 per cent year-on-year growth and retail trade growth down more than one per cent on the 50-year average in 2017, the Australian Retailers Association (ARA) believes the Government needs to offer some relief to the struggling industry.
As industries go, retail has traditionally been one of the most sensitive of all to the broader economic climate. But in recent times these sensitivities have transformed into very real pain, courtesy of skyrocketing energy and utility prices, astronomical rent increases, and some of the highest corporate taxes in the advanced world.
Intensifying this pain is a combination of sluggish revenue growth, increasing competition, and weak consumer sentiment. Everybody wants a piece of the pie, yet the pie is not getting any bigger. Some of our best-known brands are beginning to go hungry, while others have not even been that lucky.
At the ARA we represent more than 7,500 independent and national retail members throughout Australia. We urge all sides of politics to accept the economic benefits tax cuts will create, as many retailers are finding it hard to keep their heads above water due to the rising cost pressures.
Australian accessories retailer Oroton was just one of a number of high-profile brands that collapsed in 2017.
Further, retailers have told the ARA that it is becoming increasingly difficult to balance rising cost pressures with low sales growth and a high-tax environment, and some retailers are finding it hard to even pay their rent.
At 30 per cent, Australia’s is one of the highest corporate tax rates in the advanced economic world, therefore the ARA continues to call for a competitive corporate tax rate to sustain growth and drive prosperity for the country’s $310 billion sector.
At present, retailers are enduring the opposite of prosperity. Several of our best-known brands have either entered into administration or shuttered their stores completely. Some have announced plans to slash stores from their networks, while others are facing the fight of their lives in an attempt to rein in ballooning costs and deepening losses. For them, it’s a diet of bread and water, rather than pie.
The current corporate tax rate also discourages international and Australian businesses from investing in Australia and providing further job opportunities, making it extremely difficult for retailers to invest in jobs growth and increased wages.
With the Australian retail industry currently employing 10 per cent of the working population, the ARA is concerned that employees and the underemployed will be hurt the hardest, as employees are the heart and soul of retail.
As many Australian and offshore businesses choose to invest and locate headquarters overseas, the ARA believes the Senate needs to cooperate with the Government’s plan to lower the corporate tax rate below 25 per cent so local retailers are able to invest in their businesses and return to their rightful place in helping to grow the Australian economy.
As the industry employs more than 1.2 million people, the ARA will continue to advocate for a reduced company tax rate before it stifles future employment and growth. Lowering the corporate tax rate below 25 per cent will not only stimulate the economy but increase employment across the sector.
As retailers continue to struggle in a volatile trading environment, the ARA urges all sides of politics to engage in the conversation and drive industry investment, stimulate the economy, and grow employment.
Therefore, it is well and truly time that Canberra acts to reduce this ridiculously high corporate tax rate as it is a win for businesses, a win for employees and an even bigger win for the overall economy. The benefits are too great to ignore. It’s time to grab the self-raising flour, turn up the oven, add extra meat and bake a bigger pie.
The ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 7,500 independent and national retail members, which represent in excess of 50,000 shop fronts throughout Australia.
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