Governments seeing sense on payroll tax reform

Australian small and medium businesses, fed up with paying payroll taxes and other nuisance taxes, may look forward to more relief.

Australian small and medium businesses, fed up with paying payroll taxes and other nuisance taxes, may look forward to more relief. Treasurers of several states have told The Australian Financial Review that they could make a broader round of cuts to taxes affecting businesses if the Federal Government compensated them for the loss of revenue.

The Business Council of Australia estimates that companies that operate across state borders pay 56 different business taxes. Businesses are hoping that sweeping changes of the federal-state taxation arrangements might bring them some relief as will the tax review chaired by Treasury Secretary Ken Henry.

Meanwhile, the current round of tax relief measures announced in state budgets and other announced changes will save businesses more than $4.7 billion in the four years to 2012. That will include $2.5 billion from new cuts to payroll tax over the next four years.

The harmonisation of common payroll tax provisions and definitions across the territories and states, to be discussed by state and federal leaders at a COAG meeting on Thursday, will also offer some red tape relief.

However a lot more needs to be done, particularly with payroll tax reform, which is a very unpopular tax with small and medium business. Two weeks ago SmartCompany asked business owners to write in with views on payroll tax and the ways it affects their business.

Here are some recent comments:

• I’m about to employ another person but it was a margin call that I did due to the tax imposed on the company. We’re only small and every dollar counts, this is just something else we have to work that bit harder and longer to pay.
  JamieBurmeister, Adapt Solutions.
• It’s a tax that inhibits growth. I would much prefer to invest payroll tax contributions to employment training schemes.
  ColinBoyce, e-Secure Pty Ltd.
• It goes against small enterprise and employment.
  Michelle Scoble, Walker & Scoble.
• It is a disincentive to employers to employ people and contributes to the view that employees are expensive and a cost to the business.
  Leanne Gordon, Changing Futures.
• It acts as a disincentive to growth and innovation in an industry that is very much of the 21st Century – digital media. Small companies are reluctant to add staff (usually highly skilled, technical types) if it means an extra 6% tax on the basic cost of their employment.
  JohnButterworth, Australian Interactive Media Industry Association.
• It discourages people to go after their dreams…
  DanKennedy
• I believe it is a deterant to business growth and it is a burden on business.
  Troy Townley, HTA Advisory
• It is a tax on employment that is impairing our ability to compete on the world stage and stopping us from employing more people to help with our environmental innitiatives.
  RobertCameron, Rockcote Pty. Ltd.
• It penalises our organisation for growing and employing people. Without payoll tax we would be able to employ two more people which would in turn help us grow even more. It is counter productive and was supposed to be abolished when GST came in. We can only dream….
  Steve Fanale, MassMedia Studios.
• I teach business studies, and also run a micro-business with my husband. We both see this as a totally unnecessary impost on business, which is already paying its way with all other forms of taxation.
  Lorraine Nitschke, Alert Test & Tag.
• I would like to employ more people.
  Nicholas Christian, Nick Christian & Associates.
• It discourages me from hiring people and paying them fairly.
  Byron Raff, moviepartner.com.au.
• Every time I take someone off the government unemployment list or grow my business I get taxed for our success. Mind numbing!
  Tim Le Roy, Scottish Pacific Benchmark Group.
• It is inequitable, a disincentive to employ people, and has a non-justifiable basis as a tax.
  David Friend, Agvil Pty Ltd.
• I can spend the money on more staff and growing my business.
  Craig Porte, Icon Global.
• It is a tax on job creation!
  Rafael Merino, Living Energy Australia Pty Ltd.
• It stops us from employing more people due to the additional cost on top of the actual salary.
  Sonja Osborne, Alliance e-finance Pty Limited.

See the full range of comments here.