Why do we tax success in SA?

AS a small to medium-sized business state, South Australia’s growth depends on the success of the local pub, the winery that exports its top drop to China, or your local independent supermarket.

Family-owned SA business Barlows Shoes recently spoke of the payroll tax pressure facing the business, which employs Sarah Whittenbury as store manager in Charles Street, Adelaide.

AS a small to medium-sized business state, South Australia’s growth depends on the success of the local pub, the winery that exports its top drop to China, or your local independent supermarket.

Yet the pub owner, the winemaker and the grocer are among the business owners who are constantly telling us the State Government’s payroll tax policies are hindering their growth and impeding their ability to hire more staff.

They tell us payroll tax is a tax on success – the better they do and the more people they employ – the more payroll tax they pay.

We need SA to be the lowest cost place to set up and grow a business. We need small business to grow to medium business, and medium to large, because growing businesses creates employment and increases the tax base to pay for services we are all dependent upon.

A tax on jobs, on top of high power and water prices impedes this growth.

Ideally, Business SA wants payroll tax abolished but given it’s the No.1 source of revenue for State Government, outside of GST, this isn’t going to happen overnight. The current threshold, applied at $600,000, is the lowest in the country with four other states and territories applying thresholds of $1 million or more.

We are calling on the next State Government to lift the payroll tax threshold to $1.5million to ensure SA is a competitive environment in which to operate.

Many small businesses depend on the success of medium and large business. To ensure the ongoing viability and growth of all sized businesses we need to see the payroll tax rate lowered from 4.95 per cent to 4.5 per cent.

Business SA is also calling on the State Government to work with universities and businesses by offering a payroll tax incentive for science, technology, engineering and maths PhD graduates. If a payroll tax break enables tech-savvy or entrepreneurial businesses to employ a graduate, it may help stop the brain drain and stimulate the STEM economy.

We recognise the State Government’s need to collect adequate revenue to fund essential services. But we believe revenue should be collected in a manner which least impacts economic growth.

Business SA wants to make SA a more attractive place to do business, which enables growth and encourages our young people stay. But we cannot do that without a more competitive tax regime to help all sized businesses.’

Anthony Penney is Business SA’s executive director of Industry and Government Engagement