Payroll tax review proposed by SA-BEST to lighten load of SA businesses

11 March 2022

SA-BEST today announced it will seek an immediate review of the general payroll tax structure in SA - which has remained largely unchanged for more than 12 years, during which time Victoria, New South Wales, Tasmania and the Northern Territory have all lowered their general payroll tax rates. 

It will also demand a review of the controversial land tax reforms introduced by the Marshall Government in 2019 which has had a direct impact on the state’s current rental and housing crisis. 

And it will push for a 50 per cent cut to payroll tax for regional South Australian businesses are part of a range of sweeping business tax reforms and concessions unveiled today by SA-BEST. 

SA-BEST Upper House lead candidate and former Master Builders Association CEO, Ian Markos, said the move would provide a much-needed boost to the state’s economy by lightening the load of SA’s small businesses – the backbone of employment in SA. 

Under SA-BEST’s proposal, the rate of payroll tax paid by businesses in regional South Australia would be cut from the current rate of 4.95 per cent to just under 2.5 per cent. 

This would make South Australia consistent with Victoria and Queensland which have both slashed their regional payroll tax rates in recent years. 

“Payroll tax is the single most constraining state-based tax or levy on regional businesses. It severely hamstrings a regional business from reaching its true potential,” Ian said. 

“A strong and flourishing small business sector is critical to the state’s economic future, yet for far too long it has been forced to endure a myriad of taxes and charges that impedes its growth and development,” he said. 

“Collectively, small business is the largest employer in the state. In many ways it’s the backbone of our economy and a vital cog to our future development, yet is treated as a cash cow by governments due to the millions of dollars of dollars it pays annually in fees and taxes. 

“Instead of trying to release the shackles for small businesses, successive state and federal governments continue to put obstacles in front of them, making it harder for them to survive- particularly in the current COVID pandemic. 

“While recent reforms in payroll tax to businesses under the $1.5 million wage threshold have been welcomed by the sector, more needs to be done to support small business and the tens of thousands of South Australians it employs. 

“The multiple factor to the economy cannot - and should not - be underestimated.” 

Other business concessions proposed by SA-BEST include:

  • an immediate review of the general payroll tax structure in SA – which has remained relatively unchanged since 2009 - with a focus on reducing the rate across the board.
  • no increases to annual renewals of occupation licencing – builder’s licences, building work contractor’s licences, plumber’s and electrician’s licences, etc;
  • no increases to business motor vehicle registrations – which has been treated as a ‘cash cow’ for too long;
  • mutual recognition for interstate vehicle registration if registered in another state or territory in Australia – to stop the need for costly and time-consuming vehicle inspections (if it’s registered interstate and the VIN is on the national database then that should be acceptable Australia-wide).
  • review of all taxes/charges for those building a house (e.g. compulsory design requirements that first home buyers can’t afford), and;
  • review all amenity connection costs – gas, water, electricity. 

Ian said the reforms were dependent on the party winning the balance of power in the Legislative Council at the state election after which it would demand whichever party forms government to commit to the business and tax overhaul. 

SA-BEST’s proposal follows a major report by Business SA which found payroll tax is the “most constraining tax” for businesses with more than 20 employers. 

It has estimated the 50 per cent cut would cost the SA budget only $12m a year and help up to 800 regional businesses. 

SA-BEST candidate for Giles and well-known Eyre Peninsula businessman, Tom Antonio, said the proposed tax reforms and concessions being proposed by SA-BEST would be a “lifesaver” for hundreds of businesses in regional SA and keep hundreds of people employed. 

“Apart from payroll tax, regional small businesses also have to deal with increased fuel prices and other business due to where they are located,” Tom said. 

“It’s a ludicrous situation that a small local regional SA business (over the $1.5m threshold) situated this side of the Victorian border pays more than three times the rate of payroll tax of a business situated just a few kilometres across the other side of the border,” he said. 

“It makes that SA regional business anti-competitive. 

“SA-BEST’s tax reform program will correct this anomaly.”

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