May 3, 2016 12:00am - DARYL PASSMORE
BUSINESS leaders and economists are calling for an overhaul of
the state’s payroll tax, claiming it discourages small companies from employing
more people.
Only about 11,000 of Queensland’s 414,000 businesses pay the 4.75
per cent tax, which will deliver $3.8 billion to the government this financial
year.
Companies become liable once their wage bill hits $1.1 million a
year – which generally equates to about 20 staff.
Chamber of Commerce and Industry Queensland spokesman Nick
Behrens says many businesses deliberately hold off taking on more workers to
avoid the burden and complexity of the tax.
“So we are really putting
a cap on employment. Some businesses are choosing not to grow because they
don’t want the burden.
“It’s bonkers. You put taxes on things like cigarettes, alcohol
and gambling – things in society that you don’t want a high incidence of.
“Creating jobs is not something we want to be discouraging. It
is a 4.75 per cent slug on giving someone a job.’’
Nick Behrens says the payroll tax is “putting a cap on
employment”.
CCIQ is calling on the Palaszczuk Government to progressively
lift the payroll tax threshold over five years to $1.6 million. It says that
20,000 businesses would benefit and 4000 new jobs would be generated.
The amount reaped by the government from payroll tax has soared
98 per cent in the past decade and now accounts for almost a third of all state
tax receipts.
Economist Saul Eslake argues the rate of payroll tax should be
dropped to 1.5 per cent or 2 per cent – but imposed on all businesses.
“My view is quite the reverse of most (people) who want to lift
the threshold.
“Ever since the state governments got control of payroll tax in
1971, they have tended to narrow the base, and raise the rate occasionally.
“But a fundamental principle of tax reform is to apply the
lowest possible rate across the broadest possible base.’’
Treasurer Curtis Pitt says Queensland has the highest payroll
tax threshold.
Mr Eslake rejected suggestions that it would impose an
unreasonable administrative or cost burden on small businesses. “Once you have
one employee, you have to manage PAYE,” he said.
“If you had a rate of 2 per cent or less it would be less than
the amount wages go up by each year.’’
Treasurer Curtis Pitt said: “Of the mainland states, Queensland
had the highest payroll tax threshold and the lowest payroll tax rate in
2015-16.”
Gene Tunny, principal of Brisbane-based Adept Economics, said he
would like to see payroll tax scrapped.
“It’s a pretty bad tax which impacts both the employer by eating
into profits and the employee through a lower take-home pay or fewer jobs.’’
“It has a pernicious impact. But I realise that it would be
politically unpalatable to get rid of it given the billions of dollars it
raises.
“What we should ultimately do is increase the GST which is a
reasonably efficient tax and do away with things like payroll tax and stamp
duty.’’
In the meantime, he said lifting the threshold ‘‘strikes a
balance between the economics and the politics’’.
This story has
been brought to you by the Emerald Chamber of Commerce Inc.
(Ph: 07 4982
3444)
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