Payroll tax deterring employment

by 28 Apr 2009

Payroll tax is crippling small business and is a big deterrent to hiring more staff, according to Trevor Markham, managing director of EIrecruit.

As NSW’s unemployment rate hits almost 7 per cent, there is increased pressure on the Federal Government to relieve small business of the tax on how many people they hire.

“The payroll tax doesn’t take into account your profits – simply how many people you have on your books,” said Markham. “It is a big disincentive to hire more office staff, for example, which is not good when unemployment is growing.”

The NSW Business Chamber supported the urgent need for the Federal Government to fund a 50 per cent payroll tax concession across the entire country to take some of the pressure off business operators.

“The sobering unemployment figures have confirmed what we have been hearing from NSW businesses for months – that they have been under immense pressure from the global recession,” said Kevin MacDonald, CEO of NSW Business Chamber.

According to MacDonald, a 50 per cent payroll tax holiday for the next financial year (2009/10) across Australia could save businesses in NSW approximately $3.5 billion.

“Payroll tax is a tax on jobs and that is the worst tax to have in this environment,” he said. “NSW is leading the nation in unemployment; we need to provide more targeted relief for business if we have any hope of keeping a lid on unemployment.”

The ABS reported that unemployment in March jumped 0.5 per cent to 5.7 per cent and that there are now 103,000 more unemployed people than just two months ago.

The Australian Chamber of Commerce and Industry (ACCI) has also called on the Australian Government to place the issue of reducing payroll tax on the agenda of the Council of Australian Governments (COAG) when heads of government next meet on 30 April.

“This payroll tax penalises employment,” said Peter Anderson, CEO of the ACCI. “Reducing the tax on jobs would save jobs during this recession.”


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