Calls to abolish payroll tax for bush business

The call comes as Northern Tablelands MP Adam Marshall has introduced legislation into State Parliament to abolish payroll tax throughout regional NSW, ensuring businesses in the bush can grow and thrive without financial penalties.

Despite this, the NSW government says payroll tax is vital to fund regional and rural services.

Terry Rhodes, who owns an earth moving business in Armidale said abolishing payroll tax liabilities would help support regional businesses.

"It's ridiculous, we pay enough tax without being taxed again, it shouldn't be a tax for anyone, not just people in the regions," Mr Rhodes said.

"It's unfair the more employees you have got the more we are taxed."

Mr Rhodes employs 12 people in his business and was looking to expand but the payroll tax was making him "think twice about it".

"Abolishing our payroll tax liabilities will help our business grow," Mr Rhodes said.

"This will allow reinvestment of funds into innovation and job creation, helping to keep the economy in the bush rolling."

NSW Farmers business, economics and trade committee chair John Lowe said the association would support the removal of all state taxes as originally identified when the GST was introduced more than 20 years ago.

"Payroll tax is an employment tax, it's a disincentive for growth, and NSW Farmers has actually had a policy about removing payroll tax from all small businesses in regional and rural areas since 2015," Mr Lowe said.

"We know there are businesses across regional, rural and remote NSW that are struggling with this current challenging environment."

The Livestock, Bulk and Rural Carriers Association (LBRCA) has also thrown its support behind the calls to abolish payroll tax across regional NSW today.

LBRCA president Wade Lewis, posted on Facebook stating: "Over many years, LBRCA have strongly advocated for reforms to reduce the burden of payroll tax on transport businesses operating in regional NSW."

"Payroll tax is inefficient. It stifles business and wages growth," Mr Lewis.

"The LBRCA sees Marshall's bill as a crucial step towards levelling the playing field for rural transport businesses, attracting new transport and logistics roles to regional NSW, and revitalising rural economies."

Mr Marshall gave notice of motion of his bill, the Payroll Tax Amendment (Regional NSW Exemption) Bill 2024, saying it was "outdated and archaic" costing regional businesses millions of dollars each year.

"I've been talking to local businesses who are looking to expand, or who are feeling the bite from cost-of-living pressures, and who are enormously tired of government restrictions," Mr Marshall said.

"I have long said that payroll tax is a huge burden on larger businesses, it is a terrible and punitive tax - it is a tax on employment in that the more employees you have the more tax you pay."

Mr Marshall said NSW's current payroll tax rate was 5.45 per cent above the threshold of $1.2 million with regional NSW contributing to about 8.2pc of total payroll tax revenue.

Mr Marshall said the bill would create a special economic zone covering all regional NSW, that is, everything outside of greater Sydney, Newcastle, and Wollongong.

He said everything within that special economic zone would be exempt from paying payroll tax under the proposal.

"We are following the example of Victoria as regional Victoria has a different payroll tax rate to Melbourne, positively encouraging growth in the regions," he said.

"I know it will be a short-term hit to the budget's bottom line but the long-term economic benefit to the state could be enormous.

"Country NSW would be the only area in all of Australia where there is no payroll tax liability.

"This will undoubtedly result in new businesses relocating from interstate, bring pour regional communities growth and prosperity."

A spokesperson for the NSW government said payroll tax was an important source of revenue to fund essential infrastructure and community services right across NSW.

The spokesperson said small businesses, including microbusinesses, with an annual wages of less than $1.2m were exempt from payroll tax in NSW, compared with a lower threshold of just $700,000 in Victoria.

"We have been up front that we need to get the budget under control, having inherited the biggest debt the state has ever seen," the spokesperson said.

"In contrast to the approach to budget repair that has been taken by some other states, we are not going to be increasing taxes on small businesses."

The spokesperson said the government was supporting regional communities with last year's budget seeing major investment in regional health, regional schools, a boost to regional paramedics and major investment in regional roads."

The NSW Budget included $3.8 billion for regional health facilities, $1.4b in regional schools, $438.6m for 500 regional paramedics, $390m for the regional emergency road repair fund and $334m for the regional roads fund.