Victoria’s peak business body has welcomed news the state government will slash its regional payroll tax rate in half.
From July 1, the payroll tax rate for eligible regional businesses will be reduced to 2.425 per cent in what experts say is a step in the right direction to encouraging regional investment and decentralisation.
Victorian Chamber of Commerce and Industry executive director policy and advocacy Dugald Murray said Victoria’s regional payroll tax, which is the lowest in the country, would be an incentive to locate and grow new business.
“For the Valley that’s critical that we attract more businesses there and local jobs,” Mr Murray said.
Businesses with an annual payroll less than $650,000 will be excluded from the paying the tax which is estimated to save about 4000 Victorian regional businesses $167 million.
“This means more businesses can hire local people and put more back into their community,” Mr Murray said.
“It actually benefits all businesses but if you’re a business that has payroll under $650,000 you’re not paying payroll tax so that’s where the threshold rate for small businesses is really important.”
The reduction is expected to boost confidence across the business sector after the tax free threshold was raised from $550,000 last financial year.
“This is a tax that discourages business from hiring more people because if they hire more people and it puts them above the threshold, then they’ve got to pay payroll tax,” Mr Murray said.
“Once you’re over that threshold the payroll tax rate is critical because if you’ve met the tax rate – you want to be paying as little as possible – and that’s why the halving is essential.”
“We have called on the government to increase the threshold to $850,000 and that remains a recommendation we have before government and we’ll continue to advocate all major parties that they adopt that as part of the election platform.”
Advance Morwell chair John Guy said any reduction in overhead costs would be a benefit to businesses who were looking to expand locally.
“It might mean that perhaps some businesses might think about employing somebody extra,” Mr Guy said.
“We’ve had a bit of activity around Morwell in recent weeks with a new cafe opening in George Street and new people taking over the sandwich bar in Commercial Road.
“There’s also a new business in Riggalls’ old shop so it’s very promising signs and these reductions will help boost employment in and around Morwell and right across Victoria.”
