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Victorian business payroll tax pain

Victorian businesses are set to suffer more payroll tax pain, after the Victorian Government announced plans in the budget to increase payroll tax to nearly 20 percent over the next four years, despite rising unemployment.

The increase will see the payroll tax amount increase from $4.08 billion to $4.73 billion, despite the fact that unemployment is expected to rise from 5.7 percent to 7 percent by June 2010.

Craig Whatman, executive director of the tax consulting division at Pitcher Partners, said the Government had missed an opportunity to use its tax policy to make it easier for businesses to keep their employees through the downturn.

“Many small businesses will be at the coal face of the economic recovery, and could have had an opportunity to employ more people if they didn’t have to worry about payroll tax.”