The Sydney Morning Herald, 16 June 2018
The Berejiklian government will deliver tax cuts in its final budget before the state election, shifting its focus from building big infrastructure to putting people “front and centre of mind”.
Treasurer Dominic Perrottet will reduce payroll tax for businesses in Tuesday’s budget, lifting the threshold at which the tax is paid from $750,000 to $1 million by 2021-22, delivering $881 million in savings for business over four years.
Almost 40,000 businesses in NSW, 60 per cent of which are in Sydney, will either have their payroll bill reduced or drop out of the payroll tax net altogether, the government says.
Ultimately 5000 businesses will no longer face payroll tax.
The tax cut will be part of a budget focused on building for the future but also helping people, Mr Perrottet said.
“What is squarely on my mind in this budget is that it is focused on people at its heart,” he said.
“Cost of living is an issue, and balancing work and life is an issue and we want to meet people where they are. We need to deliver for today and budgets can help with the issues of the day.”
In an interview with the <em>Herald</em> Mr Perrottet portrayed the budget as one focused on “dual horizons” because it would continue to fund the government’s long-term infrastructure plans while “delivering for people today”.
The government has already indicated it will invest significantly in health and education, with $6 billion to be spent over four years in building and upgrading public schools. It also will increase its spending on mental health and front-line health workers.
Tuesday’s budget will be the last before NSW voters go to the polls next March.
When the government last updated the budget in December, strong employment growth in NSW allowed it to lift forecast payroll tax revenue by $1.2 billion over the next four years.
Payroll tax is levied on all NSW businesses once their payroll exceeds a set threshold. Under the budget changes that threshold will now reach $1 million in 2021-22.
Payroll tax is among the state’s most stable and efficient taxes and is the second-biggest source of tax revenue collected directly by the NSW government, after transfer duty.
The government expects to raise nearly $9 billion from payroll tax this financial year.
Mr Perrottet said the payroll tax changes in Tuesday’s budget will mean state taxes will have been reduced for three years in a row.
“If you look at NSW finances we got a negative net debt position, we are delivering strong surpluses, record amounts of infrastructure and at the same time in the last two budgets, and now again in this coming budget … we’ve cut taxes,” he said.
Deputy Premier and Small Business Minister John Barilaro said the payroll tax change would save money for many small business owners and give them the opportunity to “take on that extra staff member, or pursue new ideas to grow their business”.
“As a former small business operator myself,” Mr Barilaro said, ”I know how tough it can be to run a small business and so now as minister for the sector. I want to make life as easy as possible for those people who take on the responsibility of running a business and creating work opportunities for others.”
Almost 40,000 businesses will save up to $5450 in the next financial year and up to $13,625 by 2021-22.
The threshold will rise to $850,000 in 2018-19 and then in $50,000 increments until it reaches $1 million.