NSW payroll tax cuts to go ahead as employer survey slams employment taxes

New NSW Premier Nathan Rees says his Government will deliver the $1.9 billion of payroll tax cuts promised in the Iemma government’s May state budget, but says other tax cuts remain under review.

New NSW Premier Nathan Rees says his Government will deliver the $1.9 billion of payroll tax cuts promised in the Iemma government’s May state budget, but says other tax cuts remain under review.

Rees says it is important for NSW’s competitiveness that the payroll taxes are cut from 6% to 5.5% over the next three years.

“It means protecting jobs and providing a stable investment environment,” he says.

The news will cheer employer groups, after new research from consultancy firm Grant Thornton revealed employment related taxes are the biggest burden for Australian businesses.

The 2008 Grant International Business report shows 29% of companies rank employment-related taxation as the greatest constraint on their business, followed by taxes on income or profit.

Grant Thornton national head of taxation services Peter Godber says companies in nearly all the states believe staff taxes are nearly twice as excessive as corporate taxes.

“It may not be a particular rate of tax, but the number of taxes associated with employment,” he says.

Godber also says payroll tax needs to be extensively reviewed as part of the Rudd Government’s review of the taxation system to see whether a reduction, or even eradication, of the tax can help business growth.

“It really is a significant cost to employers and one of the disincentives for employing people,” he says.

“I think businesses would love to see it removed. Businesses are frustrated understanding why there has to be a payroll (tax). I think the opportunity is here to look at issues like this. One of the key issues they can look at is whether it’s necessary, and whether it’s a burden on employers.”

Godber says a reduced, simplistic tax system needs to be considered in order to stimulate business growth and help the economy: “I think simplicity in the system (is needed) to reduce the compliance burden.”

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