Business slams seven-year “payroll levy” after mining tax sneaks in increased super contributions for employers

The business community is calling for the Government to introduce a wage “trade-off” after it passed the mining tax legislation yesterday, which contains the mandate for employer superannuation contributions to rise to 12%.

This comes alongside a fierce debate over the mining tax in Parliament, where the major parties are still arguing over whether the proposed company tax cuts will be passed at all.

Australian Chamber of Commerce and Industry chief executive Peter Anderson told SmartCompany this morning the group will be lobbying the Government to deliver some wage relief.

“The best outcome now would be for the Government to announce in the Federal Budget some sort of wage trade-off for businesses.” 

“Secondly, there should be some additional tax benefits announced for employers to offset the cost of the superannuation guarantee.”

The increase will take the superannuation rate from 9% to 12% by 2019-20, with the first rise to come in July 2013, when the levy rises to 9.25%. But Anderson says it’s “insulting” for the Government to suggest the increase can be afforded over a decade.

“How increasing a payroll levy every year for the next seven years ends up making the levy affordable is beyond logic.”

While the mining tax itself has passed the Senate, the Government is still fighting with the Opposition and the Greens over other associated bills, including the proposed company tax cuts.

But Anderson says these cuts would be negated by the superannuation increase, which equates to about $20 billion per year for Australian business “both large and small”.

Anderson also says there are more businesses subject to the levy increase than will receive the tax cut.

“We can’t reverse the legislation that’s been passed, but we can put pressure on the Government to take further policy measures to stop this becoming an additional cost to business.”

The superannuation increase was originally introduced as part of the mining tax package in 2010, as part of the response to the Henry Review. Small business has fought the levy increase since then, with lobby groups suggesting smaller companies wouldn’t be able to pay.

Anderson says the group will continue to pressure the Government, but the Opposition as well, saying it should repeal the legislation if it wins the 2013 election.

“The Opposition had said they would oppose this, but they also said that once legislated they won’t repeal it. We think the Opposition should revise its position, and then commit to reviewing the changes once in Government.”