Victorian government’s payroll tax hit a bitter pill for growing businesses
Victorian Treasurer Tim Pallas and Victorian Premier Daniel Andrews. Source: AAP/Erik Anderson.
For several years now, state governments across the country have been both gradually reducing the rate of payroll tax levied on businesses, and lifting the thresholds at which payroll tax kicks in.
In yesterday’s Victorian budget, this practice continued, with the government announcing the state’s payroll-free threshold will lift to $700,000 and the rate of payroll tax cut to 1.2% for regional businesses.
Governments have seemingly started to accept that payroll tax is a disincentive for hiring. It is seen, quite rightly, as a tax on jobs. This is because the tax is, by its very nature, regressive: the more employees your business has and the bigger your payroll gets, the more tax you pay.