SA-BEST proposes parliamentary inquiry into ‘tax on jobs’ as government reaps almost $5 million a day

In the wake of the state government’s windfall of an additional $100 million in payroll tax revenue from businesses in South Australia during the 2022-2023 financial year, SA-BEST is asking the question: at what cost?

Payroll tax has already tipped the $1.7 billion revenue mark and according to budget figures, that number is forecast to increase by an average of 5.2% over the next four years. That is bad news for business in South Australia, many of whom are struggling to make a profit.

To make matters worse, payroll tax is payable regardless of a business’ profitability.

Today, SA-BEST MLC Connie Bonaros is taking a proactive step by introducing a motion into parliament to establish a Select Committee to delve into the intricacies of payroll tax in South Australia.

If endorsed, the Committee will examine the effectiveness of the current payroll tax system in fostering economic growth and job creation, in line with the overarching economic objectives of the state - something the Premier has us believe is a top priority for his government.

Despite escalating wage costs and consecutive superannuation rate hikes, the payroll tax threshold has remained static at $1.5 million since 2019.

SA-BEST says it is high time for an in-depth evaluation of both the threshold and rates, including the merits of an annual review.

An integral part of the inquiry will be exploring how payroll tax incentives could serve as a catalyst to stimulate regional investment and employment, a strategy already deployed across the border in Victoria. It will also contemplate incentives to bolster key sectors within the South Australian economy.

Drawing insights from other jurisdictions, the Committee will look to identify best practices and potential avenues for reform and alignment.

Of significant concern is the inclusion of independent General Practitioners and the general practice sector within the purview of payroll tax following recent interstate rulings, which could exacerbate workforce challenges and impede access to healthcare.

In conversations with business owners and industry groups, issues have surfaced concerning grouping provisions, retrospective liability rulings, and compliance hurdles. The Committee will delve into these issues and beyond.

The proposed inquiry underscores SA-BEST’s commitment to advocating for a fair and conducive business environment in South Australia.

Quotes attributable to Connie Bonaros MLC:

“As the Premier has aptly described it in the past: payroll tax is a ‘tax on jobs’

“Make no mistake, payroll tax has become a cash cow for the government and it is little surprise there is no appetite for change.

“The prevailing sentiment from the business community is crystal clear: the existing payroll tax framework is not just impeding job growth and investment, it is crippling it. They are the same economic drivers this government is telling us it is committed to strengthening.

“Other states are leveraging targeted measures to bolster regional employment and investment. It’s a strategy we must seriously consider if we are to remain competitive while ensuring business services in our regions.

“Small and medium-sized business owners can’t expand their workforces or offer salary increases for fear of breaching the threshold. It is the single largest factor holding them back from employing more people and expanding their business operations. Something has got to give.

“It is extraordinary a business could be operating at a loss and still be lumped with a huge payroll tax bill.

“It’s nonsensical. Wage costs have escalated significantly, yet the threshold has not moved in five years.”

For more information, please contact Jody Fitzgerald on 0408 881 548.

For comments and/or interview with Business SA, please contact Kendall Crowe on 0423 382 488.