Employer group calls for payroll tax change to help small business

Victorian businesses which pay less than $850,000 in wages a year should be exempt from paying payroll tax, according to Victoria's peak business group.

The ABC reports that the Victorian Employers' Chamber of Commerce and Industry (VECCI) wants the threshold increased from its current level of $550,000 a year paid in wages.

VECCI's chief economist Steven Wojtkiw told the ABC the payroll tax threshold hasn’t increased since 2002, even though wages have increased by more than 50 per cent. He said this meant many small businesses have passed the threshold.

"We believe that by increasing the threshold to $850,000, that would keep many small businesses out of the payroll tax net and provide an important boost to their bottom line which they would use to take on more employees, therefore creating jobs," he said.

As the SMH points out, the payroll tax threshold varies from state to state. Victoria has a low threshold, while the ACT has the highest threshold of $1.85 million.

In addition, the rate of the tax varies from state to state. For example, the payroll rate tax rate is 4.75 per cent in Queensland but 6.85 per cent in the ACT.

According to the Federal Government's recent tax discussion paper, governments in this nation gather 5 per cent of revenues from payroll tax.