Calls for State Government to Ease Tax Burden on Regional Business
“Enabling our regional businesses to attract, grow and retain staff is key to the future economic success of regional Queensland.”
Author: Carl Valentine
As a business owner and a professional who represents hundreds of other business operators, payroll tax would have to be at the top of the list as the most obnoxious tax burden hindering the growth potential of businesses across regional Queensland.
Government policy should be about enabling businesses to succeed; thereby allowing them to employ more people, put more resourcing back into local communities and ensure our regional economies are the engine room which support the prosperity of the State economy.
Payroll tax achieves the complete opposite of this- sending a clear message to employers that if they hire additional employees, they will quite literally pay the price.
A tax on wages paid by employers was first introduced by the Federal Government during the Second World War. It applied to every business in Australia. In 1971, the jurisdiction of payroll tax was transferred from the Australian Government to the States and Territories. That same year Queensland introduced its own payroll tax policy.
The tax is calculated by applying a percentage to the cost of wages once an employer reaches a certain threshold. In Queensland, the payroll tax rate sits at 4.75 per cent with a wages threshold of $1.1 million before payroll tax is payable.
Based on a full-time wage including superannuation of $68,000 (a level equivalent to the current national median full-time wage), payroll tax in Queensland captures businesses with around 16 employees (or fewer for those businesses employing more highly paid personnel).
So many businesses I speak to would love to employ more staff but the additional tax burden in doing so acts as a complicated- and expensive- turn off.
That’s why PVW Partners recently made a submission to the Queensland Treasurer Jackie Trad, calling on the government to follow Victoria’s lead and adopt a specific regional payroll tax rate that is half that of metropolitan businesses.
We argued the need for enabling reform is strong, particularly with youth unemployment in regional Queensland sitting at historically high levels.
The Victorian Government estimates its lower payroll tax rate has assisted around 4,000 businesses in regional Victoria to grow and create more employment opportunities.
Queensland Government data suggests there are more than 438,000 small businesses across Queensland, with small businesses making up more than 97 per cent of all businesses in Queensland. We recognise that many of these small businesses don’t pay payroll tax due to the $1.1m wages threshold, however, we consider that government policy should be focussed on facilitating the growth of these small businesses.
Enabling our regional businesses to attract, grow and retain staff is key to the future economic success of regional Queensland.
Payroll tax reform plays a strong role in economic decision making for business owners, including the decision to invest in a business activity, where they locate their operations, the size to which they aspire to grow their operations and how they resource those business activities.
Regionally focussed payroll tax reform provides a real opportunity to promote:
- the development of regional Queensland;
- growth for sustainable regional communities, thereby easing the pressure on an increasingly urbanised South East Queensland;
- sustainable and growth focussed regional businesses; and
- awareness and recognition of a Queensland Government that is truly committed to growing regional Queensland.
We consider that this could be effectively implemented by following the successful Victorian model and setting the payroll tax rate for a regional Queensland business at 50% of the prevailing payroll tax rate (i.e., from 1 July 2019 make the payroll tax rate 2.375% for Regional Queensland businesses).
This would restore regional Queensland as the lowest payroll tax rate jurisdiction in Australia.
Regionally focussed payroll tax reform will undoubtedly create better employment and business opportunities right across regional Queensland and in my view, that means everyone’s a winner.
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