Page 1980 - Week 07 - Tuesday, 5 August 2014
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charged one of the lowest rates of payroll tax in the country”. Treasurer, are we lower than New South Wales’s payroll tax rate of 5.45 per cent?
MR BARR: The ACT has the highest threshold for payroll tax in the nation, so for businesses with a payroll of I think about $4.5 million the payroll tax paid in the ACT is considerably lower than across the border in New South Wales. We have adopted a system where, of I think the 26,000 businesses in the territory, we exempt about 24,000 from paying the tax altogether. So we have the highest threshold, but those who do pay payroll tax pay the highest rate in the nation. That is a deliberate policy choice so as to only hit those who have very large payrolls—largely multinational companies and national-level companies, with a few local players who have a payroll over $1.85 million.
It is worth noting that payroll tax, while it is not the most efficient tax that we levy, is by no means the least efficient tax that states and territories levy. And it is an important part of the territory’s revenue base. Without it, we would need to cut $300 million worth of services to this community, and that would be an unacceptable outcome for the government.
MADAM SPEAKER: A supplementary question, Mr Smyth.
MR SMYTH: Treasurer, where does the ACT rank in the country with its payroll tax rate of 6.85 per cent, and how many local players, as you call them, pay payroll tax?
MR BARR: I refer that member to my previous answer. It is the highest rate with the highest threshold. Nearly 24,000 businesses in the territory are exempted altogether. If they were operating in New South Wales, where the payroll tax threshold is around $600,000, there would be 20,000 businesses in the territory who would be paying payroll tax. That is the New South Wales model. It is a lower rate but they have many more businesses paying it.
Our approach in the ACT is to have a very high threshold to support small and medium-sized enterprises and to only levy payroll tax on businesses with a payroll of more than $1.85 million. As I have indicated—
Mr Coe interjecting—
MADAM SPEAKER: Order, Mr Coe, you are on a warning.
MR BARR: If the Deputy Leader of the Opposition is arguing that we should extend payroll tax to 20,000 extra businesses, which appears to be the position that he is advocating, let him make that Liberal Party policy. I will very happily have that debate.
But the government’s position is that we have the highest threshold. We exclude the most number of businesses of any jurisdiction in Australia. But we also have the highest rate—and that is acknowledged—at 6.85 per cent. It is a little above other jurisdictions but because we exempt so many businesses by having the highest
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