Premier Kristina Keneally and Treasurer Eric Roozendaal have brought forward their plans to cut payroll tax, under measures introduced in today’s NSW state budget.
A lower than forecast unemployment rate as well as an unexpected surplus of $101 million have allowed the move, which will drop payroll tax from 5.65 per cent to 5.5 per cent by the start of next month.
Under the budget a further cut down to 5.45 per cent will be introduced by January 1 next year.
However, accountancy firm BDO has said that the announcement will do little to relieve the pressures faced by NSW businesses, and that the state will continue to lag behind the rest of the country.
Paul Motta, BDO Tax Director, said that the measure would not bring about any real change for businesses in NSW – a problem compunded by the budget’s failure to address the wages threshold (level before tax is payable).
“These payroll cuts are tokenistic at best.” Mr Motta said.
“Though any reduction in payroll tax is welcome, NSW businesses will still pay significantly higher payroll taxes than rival businesses in Victoria and Queensland.
“Without further significant reform, the recovery of the NSW economy risks trailing that of Victoria and Queensland.”
Victoria currently has a payroll tax level of 4.9 per cent, while Queensland is resting at 4.75 per cent with a wages threshold far in excess of NSW.
Western Australia has introduced a full wages threshold exemption for businesses with payrolls of less than $1.6 million with a partial exemption for payrolls of up to $3.2 million.