Several industry representatives have applauded the Federal Government’s economic stimulus package approach, but say it fails to address long-term IT spending in the corporate sector.
In response to the grim global economic climate and bleak forecasts of the International Monetary Fund (IMF), the Rudd Government unveiled a far-reaching $42 billion stimulus package that included, among other incentives, a 30 per cent tax break for small businesses on items worth more than $1000 purchased before June 30.
Businesses with a turnover of less than $2 million a year can claim a 30 per cent tax deduction on items (including ICT hardware) worth more than $1000 and bought before June 30. A 10 per cent deduction will also be given for assets bought between July-December (and installed before December 31, 2010). Larger businesses are eligible for the same tax breaks on eligible items over $10,000.
Numerous SMB-oriented resellers were concerned most of the funds would go into retailers’ pockets, not their own coffers. Business Technology Partners director, Michael Jenkin, pointed out most small businesses were run from home.
“I think we’re going to see a huge influx of people probably buying retail. They’re less likely to spend it on their business network, but they would more likely spend it on their home networks,” he said. “Previous financial hand outs got snapped up for computer equipment for the home.
“I don’t see complete network solutions going out or people spending $10,000. They may spend a little bit of what they can, but no more.”
Calvert Technologies principal consultant, Dean Calvert, praised incentives to help small businesses replace core infrastructure, but was unconvinced giving people money was the right strategy.
PKBA founder, Peter Kazacos, said the 30 per cent tax deduction was attractive, but would be counteracted by the Australian dollar exchange rate.
“A lot of people accepted things to be cheaper, but when they start to increase in this sort of market, people are going to buy less,” he said.
Resellers will also fight to convince customers to spend the dollars on IT equipment, Kazacos said.
“There’s nothing saying if you spend your money on computer hardware and software, you’ll get this. Maybe we haven’t pushed hard enough as an industry, but it doesn’t seem to be specific to our industry,” he said. “With all the money going to schools for building new classrooms and so on, selling into that industry might create some opportunities, but unfortunately we don’t sell insulation services.”