Local IT industry hopeful on Budget

The Federal Budget has met with approval from local industry players who hope organisations and consumers may spend more on IT products and services.

Adam Steinhardt, managing director at independent Apple computer retailer Next Byte, said his "general feeling" was the new Budget would probably help the local industry.

"The tax cuts are outstanding," he said. "I think people will be a bit more excited about buying computers. The tax cuts will certainly help IT -- certainly the retail market."

Steinhardt said the tax cuts were large enough to encourage aspirational purchases that previously consumers were putting off. More people would feel they could afford luxury consumer items such as iPods and other digital equipment.

The Budget proposals might also stop the Australian economy moving backwards, he added.

Andrew Rayment, managing director at integrator Ethan SI, said the increased budgets for various government departments, some of which were clients of Ethan SI, meant IT spend might increase.

"But there wasn't anything ground-breaking," Rayment said. "Not too much of huge interest for us."

Peter Masters, marketing director at Express Data, said the budget would be good for business. Rising commodity prices could boost income but margins would stay the same.

"With 80 percent of Australian's now paying less tax, there will be more money around," he said.

Economists had predicted the Budget would have little effect on the dollar. But Masters said it might soften by 25 percent over 12 months and businesses should take that into account, Masters said.

Australian taxpayers from 1 July are to get tax cuts totalling $21.7 billion over the next four years. The new tax cuts augment those announced in last year's Federal Budget.

Federal treasurer Peter Costello has claimed the tax cuts will boost disposable incomes. However, commentators have said that most taxpayers will be only $6 better off every week.

The thresholds for the top two marginal personal income tax rates have also been raised.

For businesses, the Federal Government has decided to abolish the three percent tariff on business inputs with no domestic substitutes imported under the tariff scheme from 11 May. Costello has said the tariff may eventually be completely removed.

"Up until now, relief from the three per cent tariff was provided as free trade agreements were negotiated. This meant imports from the US, Thailand and Singapore were not subject to the tariff," a statement from the Treasurer's office said.

"Removing the tariff for all imports will reduce business costs and improve the international competitiveness of Australian business."

The government is also reintroducing the foreign income exemption for temporary residents and reforming capital gains taxes for non-residents. Foreign loss and foreign tax credit quarantining rules are also being abolished.

"These changes will assist businesses of all sizes. Australia’s SMBs are more and more globally oriented," the Treasurer's office said.

The government is also moving to treat business expenditures more systematically under the tax laws. Changes to income tax assessment are expected to increase the deductions available for businesses.

For example, deductions for capital expenditures incurred by businesses that are carried on for a taxable purpose will now be permitted.

Also, the Australian Competition and Consumer Commission (ACCC) is getting another $20 million over the next four years to work on trade practices amendments, as recommended by the Dawson review.