This morning shares in JB Hi Fi and Harvey Norman rose
Harvey Norman by nearly 5 per cent and JB Hi-Fi by 2.5 per cent as both
retailers work out how to take advantage of the $5.5 billion small budget package encouraging small
businesses to go on a two-year spending binge for technology and appliance
products.

Last night the Tony Abbott led Government said that small
businesses could claim an immediate tax deduction for every item they purchase
up to $20,000, such as fridges, coffee machines PC’s smartphones and other
business related products… This 100 per cent write-off is available to
businesses with an ABN, earning less than $2 million in revenue.

Investment bank Macquarie tipped that Harvey Norman JB Hi Fi
and Officeworks, will benefit from the “relatively stimulatory”
budget that “should be positive for near-term retail sales in
Australia” in the near term.

“Electronic retailers to benefit from [the] end of
fringe benefits tax on portable electronic devices for small businesses, with
particular upside potential to the computer category,” it said.

“Small businesses to benefit from immediate tax
write-offs for assets $20,000 or less, enticing further spend on smaller business
expansion and equipment.”

Fairfax Media said that retailers were hard hit by last
year’s “leaners and lifters” budget, with Macquarie estimating it
would “deliver a $6.7 billion headwind to consumption that place about a 2
per cent drag on discretionary spending.”

This year’s budget, it said, would deliver “only a very
minor drag (about -0.2 per cent) on discretionary spending should the
initiatives be implemented.”

Rival UBS said this budget was “likely to be less
confronting to consumers and businesses than last year.” CLSA said it
“doesn’t harm the economy and might even help the government
politically.”

Eric Morris, chief executive of womenswear retailer PAS
Group, said “positive news is there wasn’t really any bad news” for
an economy that needed stimulating.

Russell Zimmerman, executive director of the Austrian
Retailers Association said, said smaller retailers would also benefit from a 5
per cent tax discount capped at $1000 for sole traders, sweetened incentives to
hire certain jobseekers, and the removal of fringe benefits tax on mobile
phones, laptops and tablets.

But he called on the government to lower from $1000 the
threshold at which GST is applied to online purchases from overseas sites.