Payroll tax rate drop

May 04, 2018

While perhaps a sweetener more than a game changer, lowering the payroll tax rate for the regions is set to give a helping hand to businesses in Shepparton, local stakeholders believe.

A lower tax rate was revealed as a measure in Tuesday’s Victorian budget to help regional businesses and assist in persuading businesses to open in the country.

Businesses employing at least 85 per cent local people will pay half the metropolitan payroll tax rate.

A reduction for regional businesses and an increased threshold of $650000 was announced.

The budget dropped the payroll tax rate for regional businesses from 3.65 per cent to 2.425 per cent, making it the lowest in Australia, according to state treasury.

This means the Victorian Government has halved the payroll tax rate payable by regional businesses in two years.

But deputy Victorian Opposition leader Peter Walsh questioned the numbers, arguing any reduction was a drop in the ocean in the bigger scheme of things.

‘‘That doesn’t equate to a visionary measure in my view,’’ he said.

Mr Walsh said most regional businesses were more concerned about spiralling power prices.

‘‘I think most businesses are more concerned about the increased cost of their energy,’’ he said.

‘‘That has had a greater impact than any payroll tax.’’

State Member for Shepparton Suzanna Sheed welcomed the tax cut and threshold changes.

‘‘As someone who was in small business I was well aware of the impact payroll tax has,’’ Ms Sheed said.

‘‘It may be the reason it (a business) doesn’t employ a person.

‘‘The last thing I want to see is a restriction on employment,’’ she said.

In addition to helping existing businesses, Ms Sheed said the incentive could create opportunities for new businesses to establish in regional Victoria.

Gouge linen and dry cleaning service director Rob Priestly echoed this, arguing it could give the regions a competitive leg-up.

He saw the tax incentive as a practical measure to strengthen regional business performance.

‘‘When a decision-maker is choosing between regional and metro, it gives (the regions) an advantage,’’ Mr Priestly said.

‘‘It’s good for dairy, good for fruit... all our major private industry employers.

‘‘It will have a significant impact on any large-size regional business in Victoria, helping strengthen their financial performance.’’

But he also said it was part of a broader jigsaw puzzle and while the measure was helpful, it would not change everything overnight.

‘‘I don’t want to overstate it, but it is helpful,’’ he said.

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