SMALL businesses already struggling to stay afloat may be forced to close their doors if the GST is raised from 10 to 15 per cent, according to Dubbo Business Chamber of Commerce president Matt Wright.
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Following NSW Premier Mike Baird's proposal to increase the GST to 15 per cent, which he will put forward at two-day tax summit attended by Prime Minister Tony Abbott and state and territory leaders, Mr Wright cast concerns for small businesses already struggling to pay costs.
"The increased costs would be a downside for businesses that are already struggling," he said.
"Without a doubt they would shudder at the thought of cost increases.
"The automatic trigger would be to pass the costs onto customers, which wouldn't be good as they might not be able to wear them. If people then can't keep buying products, those businesses lose revenue and that shows the real negative flow-on effect."
Mr Wright was not flat-out against an increase to the GST, but he did not believe a straight-up rise of 5 percentage points was the best option on the table.
"I welcome a discussion on the GST but I don't welcome knee-jerk reactions," he said.
"There hasn't be a change for 15 years which is surprising, but what is being proposed is a 50 per cent increase on what we have.
"I would have thought a smaller increase or to phase in an increase over several years would be a smarter option."
If the state and federal governments come to terms and agree to increase the GST to 15 per cent, Mr Wright hopes they make concessions for struggling families, to ensure they are shielded from the impacts of the increase.
"There is a lot of politics being played at the moment between the states and federal government," he said.
"The states will always cry poor, and while I find it hard to believe that from NSW at the moment with the money they would be getting from stamp duties, if they are arguing and lobbying for this state and they get some benefits then that is a good thing.
"Hopefully the benefits would be passed onto regional areas and not just kept in the cities."