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Table of Contents

• Introduction
• Background
• Rationale
• Project Objective
• Project Scope
• Literature Review
• Conclusion
• Reference list

Introduction

A detailed research report has been taken into consideration providing prime focus on the way policies designed by Government tends to impact small and medium small enterprises at large. Small and medium small enterprises mainly show a tendency to act as a source of economic dynamism, competition, innovation and generation of employment which can ultimately lead to national growth and poverty alleviation. Tax policy is regarded as one of the major factors which constitute economic environment of such medium and small enterprises. The research report undertakes a literature review section that duly intends to assess the impact of government tax policies on modifying business activities of small and medium small enterprises within the economy of Australia.

Background

It is highly essential for a large number of small and medium small business organisations prevalent within the economy of Australia to understand the impact of the tax policies implemented by the concerned government at large. As mentioned by Alshir’ah et al. (2017), this might be guided by the fact that tax policies usually result in wastage of some amount of financial resources in form of taxation. A reduction in financial resources automatically tends to redirect the concerned business organisations to restructure its business processes and reallocate all its available or scarce resources accordingly as per demand level prevalent within the market scenario targeted at large. It has been observed that appropriate implementation of taxation policies on part of the government as a whole usually tends to be highly beneficial in relation to enabling the public finances level of the Australian economy become sustainable in longer period of time. This, in a way, can help provide adequate support to promotion of economic development and support social objectives. As cited by Bloch (2016), such promotional activities might assist in fulfilment of roles of the government concerned as responsible tax jurisdiction. However, implementation of tax policies has always been a highly tricky business. This might not only be owing to prevalence of a number of loopholes but also might be a result of the fact that it might tend to act as a source of demotivation on part of the business organisations associated with the concerned government at large.

Rationale

Small and medium small enterprises usually tend to follow a simplified business structure with not much exposure. This makes them get access to limited amount of financial resources for sole purpose of carrying out their planned activities of production in a smooth and efficient manner. Emergence of such a constraint might tend to show a kind of huge impact in case of implementation of government designed tax policies on them. This can be regarded as a major issue owing to the sole fact that imposition of taxation might tend to hamper the performance of the concerned business organisations in a negative manner which thereby might lead to reduction of overall GDP level of the economy as a whole. As mentioned by Xiang et al. (2015), reduction in GDP level might have been a result of declination in production of services or goods on part of such business organisations as a result of implementation of taxation policies. Taking such an issue into consideration, it can be stated that level of GDP tends to play a prime role in relation to determining growth level of the economy at large (Ramli et al. 2015). This, in recent times, thereby, requires the government of the economy concerned to become extra conscious at time of implementation of government policies such that they fail to hamper business performance of small and medium small enterprises.

Project Objective

Major objectives of the undertaken research project are as follows:

• To assess the impact of government tax policies on performance of small and medium small enterprise.
• To investigate the importance of implementation of government tax policies on small and medium small enterprise in order to perform effectively.
• To determine the problems associated with incorporation of government tax policies in smooth conductance of business related activities on part of the small and medium small enterprise at large.
• To suggest the level of flexibilities that the government can provide in relation to implementation of tax policies on small and medium small enterprise.

Project Scope

The major scope of the project work is to assess the impact of imposition of government policies on performance level of small and medium small business enterprises as a whole within the economy of Australia. A detailed study of the impact might tend to be highly beneficial in relation to understanding the optimum level of taxation that might be suitable for the business organisations targeted as a whole. Such an understanding might be of great help in relation to maintaining growth level of the concerned economy at a consistent level. This might be guided by the fact that it is the taxation policies that is often regarded as wastage of financial resources on part of the business organisations since no immediate benefit could be visualised by them as a result. Conductance of the research report can be of great help in making the small and medium small enterprises understand the importance of paying the level of taxation imposed by the government body from time to time in a systematic for sole purpose of enjoying certain advantages in long term.

Literature Review

Assessing impact of Government tax policies on business activities of small and medium small enterprise

Adoption of tax policies on part of the government of the economy at large might tend to be of great help on its part to generate greater level of revenue. As mentioned by Dabla-Norris et al. (2017), accumulation of revenue in greater amount might be of great help in case of making the overall economy more productive by nature as a result of investing in various productive activities. Implementation of such type of taxation on small and medium small enterprises results in initial reduction of financial resources on their part (Colombo et al. 2015). However, this might help them benefit in long term as a result of access to certain amount of benefits or advantages from the concerned government.

Conceptual framework

Theories or Models Based on the Variables Undertaken

REMI Model: The REMI model is mainly regarded as a policy analysis and dynamic forecasting tool that can also be regarded as an input-output model. As cited by Ayandibu and Houghton (2017), the model, in particular, provides prime focus on wide range of areas such as planning, forecasting, taxation, transportation and economic development. The model, thereby, can be of great help in case of predicting the tax policies that can be highly helpful on part of the government on one hand and does not lead to creation of any kind of demotivation on part of the business organisations associated with it at large (Colombo et al. 2015).

KMV Model: The model mainly to a structural approach that tends to be of great help in relation to analysing the probability of default in actual terms. As opined by Trianni et al. (2016), the model, thereby, might tend to be highly beneficial on part of the government concerned to analyse the fraction of financial resources it would not be able to get access to in the form of taxation as a result of acute negligence on part of small and medium small enterprises to pay the level of taxation imposed on them. Such accurate prediction from beforehand might tend to be of great help on part of the governing body to plan all its investment related activities in an efficient manner. As stated by Xiang and Worthington (2015), this, in a way, might tend to be highly helpful on part of the concerned government to obtain a brief estimation about volatility of assets prevalent on part of organisations and market value in general. Besides this, it can also enable it scale the distance to face a default situation to that of actual default probability through usage of a default database (Colombo et al. 2015). The way the governing body might carry on estimation of default probability can be illustrated with help of the figure provided as follows:

Figure 1: Estimation of default probabilities with due reference to default distance
(Source: Leigh and Blakely, 2016)

Taking into consideration the figure provided above, it can be stated that on basis of historical information of sample firms with due reference to every time horizon, the concerned government body might estimate default distance of enterprises targeted that defaulted after a year in real terms.

Association Taxation Model: This particular economic model is of great help in case of describing complex processes in form of a simplified framework. It is mainly a theoretical construct that undertakes the initiative to represent economic processes with help of quantitative or logical relationships existing between them. As mentioned by Trianni et al. (2016), the model might tend to be of great help in relation to enabling the small and medium small enterprises collect taxes on behalf of their concerned authorities. This model can thereby be of great help on part of such enterprises to obtain the initiative to pay taxes in a systematic and structured manner.

Segmentation taxation model: This particular model engages itself in identifying small and medium small enterprises based on varied categories and thereby charging them accordingly. As stated by Ramli et al. (2015), development of such a model might tend to be of great help in relation to avoiding imposition of excessive pressure upon the enterprises at time of imposition of taxation. Charging taxes as per their capability might also help avoid the consequences of reluctance to pay taxes to some extent.

Importance of Implementation of Government Tax Policies On Small and Medium Small Enterprises

Government sector bears the right to establish policies or regulations on part of business organisations at large guided by the sole purpose of providing some kind of guidance to them. The small and medium small enterprises are required to be flexible enough to respond to changed policies or rules imposed on them for purpose of attaining some beneficiaries in long term as a result. As mentioned by Storey (2016), this might be a result of the fact that it is the government sector that usually shows an initiative to work towards maximisation of social welfare. Thereby, the financial resources collected in the form of taxation are to be returned by the government to the public in some way or the other. Thereby, greater the access to financial resources in the form of taxation on part of the government concerned greater would be the social welfare generated. As opined by Hillary 2017), accumulation of adequate amount of financial resources in hands of the concerned economy might not only help it get indulged in productive activities of varied types as a result of investment but also provide some level of subsidiaries to the enterprises concerned in long term. Acute access to subsidiaries might enable the small and medium small enterprises to enhance their growth level and enjoy economies of scale. As suggested by Dabla-Norris et al. (2017), this might mainly be a result of development of capability on its part to carry out all its planned production activities at a lesser amount of cost than it initially required to be incurred. Such reduction in level of cost required to be incurred might as a result enable them to market all their manufactured products or services at a lower market price than actually prevalent and thereby attain a distinguishable position within the economy.

Challenges Faced in Implementation of Government Tax Policies On Small and Medium Small Enterprises

Implementation of taxation policies on part of small and medium small enterprises might tend to show a great deal of impact on market price level of the goods or services manufactured by them at large. As stated by Colombo et al. (2016), this might be a result of the sole fact that the officials associated with such business organisations usually show utter willingness to give up their accumulated financial resources in form of taxation. Imposition of taxation policies encourage them to hike up the market price level of the products guided by the sole purpose of getting access to the taxation amount from those of their targeted customers. Such increment in market price level of products automatically might tend to show an impact on demand level prevalent on part of the customers in aggregate terms. As opined by Ocheni and Gemade (2015), the fact that an increment in price level of products changes taste or preferences of customers might contribute to this. A fall in aggregate demand for the products might discourage producers of small and medium small enterprises to get involved in further activities of production (Colombo et al. 2015). Reduction in output generation, in a way, is likely to curtail the economic growth of the economy concerned at large and thereby arisal of incapability on its part to cope up well with the acute level of competition prevalent over all the economies of the world at large.

Gap in Literature

A number of drawbacks had to be faced at time of gathering relevant information in relation to impact of adoption of government policies and implementation of them on small or medium small enterprises at large. Limited research work has been conduction based on the particular selected area. The impact of implementation of government taxation on small and medium small business organisations have not been taken into serious account in most of the articles or journals taken into consideration. On other hand, a large number of journals and books that could be have been relevant for the undertaken research could not be accessed since password or login ids were required which were in accessible. The consequences of imposition of higher level of taxation on declination of business activities of the business organisations facing it are hardly discussed. Such factors thereby widened the gap at time of conducting the literature review section in an efficient and detailed manner.

Conclusion

It can be concluded that the small and medium small enterprises initially show a tendency to consider the government tax policies imposed on them as wastage of valuable financial resources accumulated on their part. This, thereby, is observed to make the government extra conscious at time of implementation of government policies such that business performance of small and medium small enterprise fails to get hampered as a result. However, this might tend to be highly beneficial on their part in long term guided by the sole fact that the government sector of Australia usually undertakes the initiative to collect financial resources in the form of taxation in order to maximise social welfare level of the economy at large. It could be seen that the REMI model and KMV model might tend to be highly beneficial on part of the government concerned to get an understanding of the probable amount of default it is likely to face and the exact kind of taxation that requires implementation for purpose of fetching optimum benefit.

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