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Payroll tax strangling employment growth

Adam Zuchetti
Adam Zuchetti
28 September 2017 1 minute readShare
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Governments at all levels are being singled out for their hypocrisy of purporting to stimulate jobs growth while taxing businesses for taking on new employees.

With the World Economic Forum criticising Australia for restrictive labour regulations and tax rates, which are contributing to its underperformance in comparison to other countries in terms of global competitiveness, businesses have criticised the very notion of taxing firms that are growing their workforce.

“Why penalise companies for employing people? There is a 5.45 per cent payroll tax levied in NSW for a payroll over $650,000,” said one My Business reader.

“We want full employment, but most companies will cut staff, reduce or restrict their production to keep below this crazy tax [threshold].

“We hear the politicians crowing about ‘job growth’ and then they apply this restrictive tax when companies grow and employ more people. On top of this, the national minimum wage goes up every year, pushing even small businesses closer and closer to this insane payroll tax.”

It comes as the latest MYOB Business Monitor survey again highlighted a push by SMEs for a less restrictive tax and regulatory framework, with payroll compliance one of the top targets for reform.

“Current payroll compliance requirements can be complex and difficult to navigate with lengthy reporting processes required of accountants,” MYOB chief executive Tim Reed told My Business’ sister publication Accountants Daily.

A separate poll by Scottish Pacific has found that tax rates are one of the major contributing factors for businesses to put off hiring more staff, with 21.3 per cent of business leaders saying lower business taxes are their primary concern, while 8.2 per cent specifically nominated the abolition of payroll tax as the most important means of supporting their future growth.

Payroll tax strangling employment growth
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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