Page 371 - Week 02 - Tuesday, 4 March 2008
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the nature of the payroll tax that it is a relatively efficient tax in comparison to many other ACT taxes. Thus, it is not an area in which I would advocate substantial change to alleviate the tax burden. There are other areas in which this is far more important.
Whilst I recognise that the payroll tax is a relatively efficient tax, I note that the Canberra Business Council has recommended some changes to the payroll tax in order to alleviate the burden on smaller employers and provide incentives to businesses to attract employees from interstate. In particular, it has recommended that the current payroll tax threshold should be raised and that this threshold should be indexed in accordance with wage growth. This would alleviate the burden on smaller employers and ensure that there is no bracket creep in payroll tax over time. To this extent, this reform seems not only fair but reasonable. The Canberra Business Council is also recommending considering payroll tax reductions for companies that attract employees from interstate or overseas.
It is clear from these recommendations and from the continuing interest of the business community in this area of law and taxation that payroll tax is an area of ongoing interest and that there is scope for further reform.
Another area in which there is potential for greater reform is in the harmonisation of workers compensation laws and payroll tax laws. Those businesses that are required to pay payroll tax will, I believe, without exception, all be required to take out workers compensation insurance. There is some overlap in these areas. That gives us some scope to look at reforms along the same lines as are contained in this bill, to harmonise the operation of laws that affect ACT businesses.
Both sets of laws operate on the basis of the same factors, such as employee wages. It is important to ensure that laws in both areas have corresponding definitions and calculation methods. This is also an issue which affects the compliance costs of businesses. I know that there has been some confusion amongst businesses in the ACT regarding their obligations in terms of workers compensation insurance.
I recently made representations to the Attorney-General on behalf of a constituent who was unsure about their legal obligations regarding that particular insurance. They found WorkCover to be most unhelpful on this matter. The issue relates to what is an employee; obviously the same issue potentially arises in other areas of taxation. In that instance, the WorkCover position was to tell him to get his own legal advice, a prospect which is fairly unattractive given the cost.
I cite this incident to show the kind of compliance cost that can occur when legislation is confusing to those who may have to live by it. Harmonisation in this area may give us some greater clarity and efficiency. I certainly hope to see a system in Australia in which both payroll tax laws and workers compensation laws are, to the extent humanly possible, harmonised between jurisdictions and between each other so that businesses are able to clearly understand their obligations regardless of where in the country they are operating.
From my own thinking about it, I understand the conflict and complications that harmonisation might raise, but it is a goal that the government should have in mind if they are trying to reduce the burden of red tape.
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