Car industry praises Federal Budget

The Federal Chamber of Automotive Industries has praised the Federal Budget handed down by Treasurer Wayne Swan last night. FCAI chief executive Andrew McKellar (pictured) was pleased that the government has not only extended the investment tax break for small business but also increased deductable amount.

Under changes announced last night small businesses will still be able to claim a tax deduction on new capital assets -- specifically cars -- until the end of this year. In addition to that Swan upped the deduction from 30 per cent to 50 per cent.

In basic terms that means small business owners will be able to claim a tax deduction on half of any new vehicle purchased between December 13, 2008 and December 31, 2009.

"The tax break will help stimulate the new vehicle market and support jobs in the industry," McKellar says.

"Every plumber, every painter, every electrician -- in fact any small business owner -- is urged to take full advantage of this offer.

"This measure offers an incentive of real value and will encourage small business owners to bring forward purchasing decisions.

"The tax break offers a huge saving on the cost of a new vehicle.

"It provides a real boost in confidence to small businesses looking to undertake new investment in coming months."

But it wasn't all praise from the automotive sector with the VACC, Victoria's automotive industry body, questioning the viability of the 'Nation Building for Recovery' plan that anticipates a $58billion deficit.

"There were few surprises in the Treasurer's Budget given the many leaks, and Mr Swan can be applauded for preferring what he referred to as a 'program for responsible borrowing' over balancing the Budget through tax increases and cutting key services," says VACC executive director, David Purchase.

"However, it was disappointing that the Treasurer did not make it crystal clear what will be done over the next five years to return the Budget to surplus.

"The Rudd Government has forecast a 4.5 per cent growth per annum to 2015 when the recovery comes, but this expectation may be regarded as optimistic and therefore, the deficit may continue beyond the government's projections.

"It is all well and good embarking on a program of infrastructure measures in the name of 'Nation building', but this has to be repaid. We are concerned that this could deliver economic problems in the long run."

However, Purchase joined McKellar in praising the government's decision to give small business a tax break.

"A positive for our 5500 members was small business tax breaks being increased to 50 per cent of the value of assets ordered by December 2009," he says.

"However, it is a shame not more was announced to assist and stimulate small business as they are the engine room of the economy and generate jobs."

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