As the countdown to the 2022 State election nears the six-month mark, parties seeking to gain majority support also need to turn their attention to policies which can make a substantive impact on regional South Australia.
Closed state borders have resulted in an uplift in intrastate tourism during the pandemic, which regional towns have welcomed. However, as the opening of both state and international borders becomes more likely in coming months, visitation to regional South Australian towns will likely suffer as tourist hotspots around the country rebound. At that point, regions will be looking at political parties for policies that address sustainable economic growth.
Last month, the South Australian Business Chamber, as South Australia’s peak employer body, released Charter22, a reflection of the business communities’ vision for South Australia. Charter22 comprises 26 recommendations for political parties to take to the March 22 election, including a 50 per cent payroll tax discount for regional South Australian businesses.
A range of major government-led tax reviews, particularly the Henry Tax Review in 2010, have demonstrated payroll tax to be less efficient than broad-based taxes including the GST. In effect, for every dollar raised from an inefficient tax such as payroll tax, there is a greater drag on economic growth than for a tax dollar derived from an efficient tax. This is no surprise from a tax on jobs.
In recent years, both Victoria and Queensland have introduced regional rate discounts. With a payroll tax rate of only 1.2125 per cent in regional Victoria, against 4.95% in South Australia, we currently have a situation where South Australian businesses above the $1.7m wage threshold here pay over 3 times the rate of their competitors that in some cases operate just kilometres away.
The South Australian Business Chamber’s 2020 Regional Voice Survey highlighted the myriad of challenges facing individual businesses as well as the needs of their broader regions. From the 2020 survey results, the most constraining state-based tax or levy on regional businesses was payroll tax.
In terms of eligibility for a regional payroll tax discount, the South Australian Business Chamber recommends the State Government consider the Victorian model which requires an employer to have at least 85% of their staff work in regional Victoria, as well as maintaining their principal place of business there. However, we suggest the employee test for South Australia go and require that 85 per cent of employees have their primary residence in regional South Australia.
The South Australian Business Chamber recognises that wholesale tax reform still needs to be tackled at a federal level to ultimately abolish payroll tax, with a campaign currently being led by the Australian Chamber of Commerce and Industry, but this will take some time. In the interim, we cannot sit idle while other jurisdictions undermine our competitiveness.
A 50% regional payroll tax discount will provide a sustainable platform for the growth of industry outside our capital city, creating jobs and much needed population growth. Compared to a broader payroll tax reduction, it is an affordable ask right now, and the South Australian Business Chamber encourages every political party to give it due consideration as we approach March 2022.
Read Charter22 Here >
Originally published in The Advertiser’s South Australian Business Journal on 14 September, 2021
