Time is right for further cuts to NSW payroll tax

27 May 2010

NSW’s largest business organisation, NSW Business Chamber, has expressed its disappointment that Unions NSW would oppose cuts in payroll tax that would encourage employers to create more jobs, especially given the $2.7 billion improvement in the NSW Budget bottom line.

“Further cuts to NSW’s high payroll tax are affordable.  The time is right to continue the NSW Government’s campaign of cutting payroll tax and getting us into a more competitive position with Queensland and Victoria,” said Stephen Cartwright, CEO of NSW Business Chamber.

“Payroll tax is a tax on jobs.  It’s a disincentive for employers to grow their businesses and put more people in jobs.  I’ve spoken to many employers who have told me that if the rate was cut they would be more likely to put on more staff.

“I’m surprised and disappointed by Unions NSW objection to further cuts in the NSW’s payroll tax rate that would encourage employers to create more jobs.

“It would appear that Unions NSW is more interested in exporting jobs to Victoria and Queensland than creating a competitive business environment in NSW.

“Cuts in NSW’s high payroll tax rate is a campaign that both employer and employee organisations should get behind.  It benefits employers by making them more competitive with other businesses and it benefits employees by encouraging more employment opportunities.”

Mr Cartwright said that Unions NSW objection to further cuts in payroll tax would undercut NSW’s competitiveness considering that other states like Victoria have just announced further cuts to their payroll tax rate.

“Victoria will be cutting their payroll tax rate further to 4.9% from 1 July.  NSW’s rate is currently 5.65%, with a further cut to 5.5% from 1 January 2011.  Unions NSW is asking NSW to give up on the race to be competitive with other states.”

NSW Business Chamber outlined a fully-funded program to cut NSW’s payroll tax rate to 5% over the next four years in its pre-election policy blueprint, “10 Big Ideas to Grow NSW”.

“Our proposal to cut payroll tax in 2011-12 to 5.35% would cost $185 million dollars.  This is affordable given that the current projection for the budget surplus is around $1.7 billion.”

Mr Cartwright said that if Unions NSW was seriously concerned about the increasing cost of the public sector they should be advocating for public sector reform to rein in costs not slugging businesses with uncompetitive taxes.