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Legislative Assembly for the ACT: 2002 Week 10 Hansard (27 August) . . Page.. 2816 ..

MR HUMPHRIES (continuing):

Mr Speaker, on the face of it, the proposal to align what is included, for the purposes of definition, in the payroll of a company, or an employer, with the practices of other states is a good thing. That much of these measures the opposition would not oppose. It would certainly be of assistance to businesses operating across the border to have the convenience of using the same software packages in their operations to deal with payroll payments in both the ACT and, say, New South Wales.

The concern about this legislation is that these changes have been accompanied by a clear decision to increase the amount of payroll tax collected. The effect of that, as I have said, is to increase the impact on employers and, ultimately, to reduce their capacity to employ people. The payroll tax increase is $2.2 million in this financial year, and it will rise to $2.326 million in 2005-06. I am a little curious, because the increase from this financial year to 2005-06 is much less than the rate of inflation.

Mr Quinlan: It is because companies are managing their payroll taxes, Gary.

MR HUMPHRIES: Perhaps that is the point I want to make, Mr Quinlan.

Mr Quinlan: We have an easily managed system. We have a system within which it is easy to manage.

MR HUMPHRIES: That may be a good thing in one sense, but it may indicate that, if people are taking steps to avoid the tax, there is a need to consider whether high levels of taxation are a good thing.

Mr Quinlan: I will talk to you about that.

MR HUMPHRIES: You do that, but I would say, in the meantime, that measures which, under whatever guise, increase the total tax and payroll tax are bad, wrong and should not occur.

I would say to the Treasurer that if he brought these proposals forward to align our tax collection arrangements with other states at the same time as he either reduced the rate or increased the threshold, he would have full support from the opposition. But to take that step, with the effect of increasing the payroll tax take, is of concern. We again put on the record our view that payroll tax is a tax on employment. It is a tax designed to make it more difficult to employ people. I fear that, in the next few years, we will have reason to regret the fact that we did not take more steps to encourage employers to keep levels of employment high.

I have also made reference to the retrospective effect of the legislation. This change was announced on 25 June. We pointed out, at the time-

Mr Quinlan: You have said all this.

MR HUMPHRIES: I am going to make another point, if you would not mind, Mr Quinlan. I did ask if we were able to deal with this legislation after the appropriation bill, as your original program indicated.

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