The Coalition has vowed to “roll out the red carpet” for businesses and cut the payroll tax for small companies as part of its push to reinvigorate the state’s economy in the aftermath of COVID-19 disruption.
Opposition Leader Matthew Guy said on Monday that, if the Liberal Party won next month’s election, he would lift the payroll tax threshold – which is based on a company’s annual wages bill – from $700,000 to $1.6 million.
Opposition Leader Matthew Guy says lifting the payroll tax threshold will “allow businesses to employ more Victorians”.Credit:Eddie Jim
Under the changes, 14,000 businesses would not pay payroll tax and a further 14,000 would save up to $43,000, according to the Coalition.
“We’re going to make the payroll tax system from the worst in Australia to the best in Australia,” Guy said at the Melbourne Performance Centre in Croydon South. “Payroll tax is a tax on jobs … [the policy] will allow those businesses to employ more Victorians or rejig their businesses to future-proof them.”
Businesses have long called for changes to Victoria’s payroll tax system, which they say is not as competitive as that in NSW.
The Victorian Chamber of Commerce and Industry has previously said the state should match NSW as a minimum by lifting the wages threshold from $700,000 to $1.2 million.
However, while NSW has a higher threshold than Victoria, it also applies the tax at a higher rate of 5.45 per cent, regardless of where a business is located in the state. Victoria charges 4.85 per cent on the proportion of the wages bill that exceeds the threshold for Melbourne businesses, and 1.21 per cent for regional businesses.
Grattan Institute economic policy program director Brendan Coates said there was no good reason why small businesses should be exempt from payroll tax and the evidence pointed to having a flat rate that applied to all businesses irrespective of size.
“This is a pretty piecemeal change,” Coates said. “A root-and-branch reform would go in the other direction to provide a level playing field for small and larger businesses.
“[The opposition’s announcement] pushes more workers to work for small businesses, and the cost of that is pushing them away from being able to work in larger businesses for higher salaries.”
David Southwick has described payroll tax as “a tax on employing people”.Credit:Eddie Jim
Opposition small business spokesman David Southwick said many businesses had moved interstate, particularly to NSW, as a result of Victoria’s payroll tax impost.
“Today we’re rolling out the red carpet and saying Victoria is open for business again,” he said. “That is so important to restore confidence back into our community … this is a jobs tax, it’s a tax on employing people.”
The Coalition’s policy would cost $435 million over four years, according to the independent Parliamentary Budget Office’s costings.
While opposition leader in April last year, Michael O’Brien also announced he would lift the payroll tax threshold to $1.6 million, but costed the policy at $1.3 billion over four years.
Guy said he would have more to say on tax reform, including stamp duty, over the coming weeks, and accused the government of introducing 43 new taxes since it was elected in 2014.
Victorian Chamber of Commerce and Industry chief executive Paul Guerra said the planned changes were “exactly the type of support that Victorian businesses are looking for”.
“We want Victoria to be the best state to own and operate a business, and competitive state taxes play a vital role in stimulating business investment and job growth,” he said.
“Payroll tax is a disincentive to employ more staff, and Victoria’s metropolitan threshold means Victorian employers pay more tax for having more employees.”
A Victorian government spokesman said Labor had cut or abolished taxes and fees 57 times in eight years, and increased the statewide payroll tax threshold four times.
“Matthew Guy’s Liberals can’t be trusted on jobs,” the spokesman said.
“The last time they were in government, they sacked thousands of workers, including TAFE teachers and health workers – and had the highest unemployment on the mainland. They also increased car taxes and licence and rego fees, costing Victorians more than $1.3 billion.”
The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.
Most Viewed in Politics
From our partners
Source: Read Full Article
