Queensland government breaks payroll tax promise

The Queensland government will break its election promise to increase the payroll tax threshold.

Raising the payroll tax exemption to $1.6 million was one of Premier Campbell Newman’s key election policies, but the government has announced it will defer the increase for two years in a bid to save $235 million.

The next increase in the payroll tax threshold was to take effect from July 1, 2013. It will now be deferred for two years until July 1, 2015.

Queensland Treasurer Tim Nicholls said he had to increase taxes in the state’s June 4 budget due to a $1.2 billion shortfall in tax revenue.

“The government is determined to remain a low taxing state, but the reality of falling revenue and increased expenditure is that some tax increases and deferrals of election commitments are needed to be able to fund services,” Nicholls said in a statement.

“Given the cost of the January 2013 natural disasters, sadly, the government was left with very little option other than to defer the increases in payroll tax to fund the recovery work.”

Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany it was disappointing the government had broken its promise.

“It’s about the confidence of the small business sector, when we are promised something and then the promise is withdrawn it saps confidence,” Strong says.

“When you have to question what you are told it really makes it hard to plan ahead.”

Strong says if the Queensland government had budgetary problems it should not have made promises to small business to increase the payroll tax threshold in the first place.

“If that was a promise just to get elected the government shouldn’t have made it in the first place,” he says.