The state’s peak business organisation, the NSW Business Chamber, has renewed calls to increase the payroll tax threshold to assist NSW remain competitive with other states and territories. NSW has the third lowest threshold in the country.
The call has been made in the Chamber’s submission to the Legislative Assembly’s Committee on Investment, Industry and Regional Development Inquiry into Zonal Taxation.
The ACT has increased its payroll tax threshold to $2 million and Queensland has a payroll tax rate of $1.1 million.
Ahead of the NSW State Budget, our proposal is for an increase in the payroll tax threshold to a minimum of $1 million along with annual assessments to ensure NSW remains competitive.
Payroll tax is a tax on jobs and job creation. Cutting payroll tax reduces the barriers on 300,000 NSW small businesses to grow and employ more staff.
To ensure continued investment and growth it is essential for NSW to have a tax regime that is competitive with other states and territories.
An increase in the payroll tax threshold would provide assistance right across NSW.
Regional NSW has a higher relative share of businesses just over the current payroll tax threshold, these are mum and dad businesses that shouldn’t be caught up in the complication of processing payroll tax or be penalised for hiring more staff.
The Chamber maintains improving the competitiveness of our payroll tax system is central to the task of building an even stronger economy and supporting meaningful work opportunities for the people of NSW.
While lowering the payroll tax rate would improve payroll tax competitiveness, the Chamber asserts that doing so in any meaningful manner would have a significant Budget impact.
On the other hand, increasing the threshold would allow a more aggressive reduction in the effective rate of payroll tax paid by SME’s.
The Chamber’s proposal to increase the payroll tax threshold to $1 million on its own would deliver a significant improvement for small business right across NSW and significantly improve competitiveness for cross-border businesses.
Joe Townsend is the Regional Manager - New England North West, NSW Business Chamber.