Victorian premier John Brumby has announced his government will cut payroll tax by 0.05% if it wins the upcoming election, in a move that brings Victoria a step closer to having the lowest rate in the country.
The announcement has been welcomed by the Victorian Chamber of Commerce and Industry, but the group also says a further cut should be made, to 4.75% in 2012, along with a threshold increase from $550,000 to $700,000.
Brumby said the Government wants to focus on business in the upcoming election, promising to cut payroll tax by over $200 million over four years, beginning from next July. The cut would lower Victoria's rate from 4.9% to 4.85%.
"You think of the high Australian dollar, the pressures that are on business, it's really important that government whenever it can keeps removing some of those cost pressures," Brumby told reporters yesterday.
"Our priority in the years ahead is going to be around cutting payroll tax to generate jobs," he said.
Victoria has the second-lowest payroll tax rate in the country at 4.9%, but even with the 0.5% cut, the rate will still be higher than Queensland's, which is 4.75%.
The current rates of payroll tax:
- ACT – 6.85%
- Tasmania – 6.1%
- NT – 5.9%
- NSW – 5.5% (This will change to 5.45% next year)
- WA – 5.5%
- SA – 4.95%
- Victoria 4.9% (This will change to 4.85% under Brumby's proposal)
- Queensland – 4.75%
The Victorian Employers' Chamber of Commerce and Industry welcomes the move as a solid one that will save businesses millions of dollars, but also says further changes are needed, including dropping the rate to 4.75% during 2012, and increasing the threshold to $700,000.
"Today's cut will help SMEs struggling with higher interest rates, higher wage-related costs as a result of skills shortages and the 'Fair' Work Act and, in some case, currency-related costs," VECCI says.
"To cement our competitive position and draw level with Queensland as having the lowest payroll tax rate, Victoria needs to go further and cut payroll tax to 4.75% by 2012."
The group also said it ultimately supports the "total abolition of payroll tax".
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