Payroll tax harmonisation helps – but cuts would be better

Moves by a federal/state deregulation working group to investigate bringing the nation’s payroll tax rules into line are welcome, but should be extended to consider tax rates, business groups say.

The Council of Australian Governments working group on cutting red tape will reportedly look at ways to harmonise definitions and rules in different state payroll tax regimes, but won’t review the cost burden imposed on businesses by the tax.

But NSW Business Chamber head Paul Ritchie says businesses in that state are struggling under the highest payroll tax rate in mainland Australian, and need some relief.

“Creating common definitions and rules are good things, but they are small bickies – it won’t dramatically change the lives of business. The real issue there is the rate and threshold, and no-one should be under an illusion changing some words or tidying up legislation will dramatically help business,” Ritchie says.

VECCI spokesman Chris James says the ideal end point of any review into payroll tax would be its eventual abolition.

“We think harmonisation is a good thing as long as it doesn’t mean broadening the tax net or increasing revenue take,” James says. “Our established position is that it should be abolished over the medium term.”