2 hours ago
4
Kellie Sloane will attempt to re-position the Liberals as the party of lower taxes in her budget reply speech as the countdown to the election campaign begins in earnest.
The opposition leader will propose cutting payroll taxes for small and medium businesses, marking a significant point of difference to the government and attempting to win back traditional Liberal voters as the Coalition staves off the threat of One Nation.
Under the proposed changes, businesses would pay the state payroll tax only if wages paid by an employer hit $1.5 million, up from $1.2 million. The tax rate would be cut from 5.45 per cent to 4.75 per cent for businesses with a payroll spend below $10 million, and the threshold will be indexed to the consumer price index.
Businesses pay tax on the wage expenses above the threshold. A business spending $2 million a year pays $43,600 under the current system, and would pay $23,750 under Sloane’s proposed changes.
The policy announcement will raise questions about the state’s revenue avenues, with high payroll tax returns currently offsetting some of the downturn in stamp duty and land taxes from a softening property market. The budget papers reveal the government expects to benefit from $943 million more in payroll tax over the next four years.
The Coalition insists it will find ways to make up the shortfall in revenue, but these were not provided to the Herald on Wednesday.
Treasury documents released to the parliament show about 1200 new businesses are liable for payroll tax each year with the threshold frozen at $1.2 million because of bracket creep. The Liberals claim their reforms will remove about 4000 businesses from the payroll tax system.
“Payroll tax is a tax on jobs, investment and growth. If we want more businesses to invest,
employ more people and expand, we need a more competitive tax system,” Sloane said.
The Coalition argues making the state’s tax regime more attractive for businesses will create more local jobs and prevent small and medium businesses from expanding into other states with more competitive tax rates.
Business NSW chief executive Daniel Hunter welcomed the announcement, which he said would boost business confidence in NSW. Hunter was at odds with the Coalition last year over the workers’ compensation stalemate, which became Sloane’s first major policy intervention as leader.
The Coalition also announced this week it will scrap a controversial transmission line and force Sydneysiders to shoulder more of the state’s clean energy projects.
Premier Chris Minns spent Wednesday selling his government’s final pre-election budget to voters, talking up the $100 cut to vehicle registration fees and a $50 toll cap, but insisting the government was staying sensible with spending to avoid inflationary pressures.
“As the treasurer made the point repeatedly in the budget, we’re doing our bit when it comes to not putting excessive demand in the economy as a result of government spending,” Minns said.
The premier was asked if the downturn in stamp duty and land tax revenue was worse than he expected in the aftermath of the controversial federal budget.
“We haven’t tried to gild the lily and say that it hasn’t had any effect on stamp duty revenue, but we’ve tried to measure as best we can the impact of lower stamp duty receipts over the forward estimates,” he said.
He said it was too early to fully understand the impact of changes to capital gains tax and negative gearing as the housing market changed week to week.
Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.
