Labor calls on State Government to fast-track payroll tax cut with extra GST cash

LABOR has offered the State Government backing to bring forward a major tax cut for small business, saying an unexpected GST windfall should be used to fast-track the relief.

• SA to score extra $500m in GST cash
• Liberals would cut payroll tax

LABOR has offered the State Government backing to bring forward a major tax cut for small business, saying an unexpected GST windfall should be used to fast-track relief.

Premier Steven Marshall has pledged to eliminate payroll tax for SA’s small businesses by lifting the threshold at which they are first stung with the fee from a total wages bill of $600,000 to $1.5 million.

The Government says the tax cut is a key move to turn around the state’s “jobs crisis” and will come into force on January 1.

Opposition Leader Peter Malinauskas’ first major post-election shift was to throw Labor’s support behind the plan, set to be a centrepiece of the new Government’s first State Budget in September.

Opposition leader Peter Malinauskas

He now says the change should be fast-tracked by six months and start on July 1.

It follows a Federal Budget this month which revealed a major boost in SA’s expected GST share, an extra $270 million over the next year that was not included in the last update of SA’s finances released in December.

“The Liberals have talked the talk on payroll tax, they now need to walk the walk,” Mr Malinauskas, above, said.

“With hundreds of millions of additional dollars flowing into the state’s coffers, now is the time to deliver. Mr Marshall doesn’t have to wait.”

Mr Malinauskas said the Government’s costings indicated a six-month head start would cost about $22 million.

Treasurer Rob Lucas told The Advertiser there were no plans to bring forward the tax cut start date, and much of the new GST cash would be used to deal with “blowouts” left by Mr Malinauskas and Labor.

“Given that the Labor Party opposed payroll tax cuts by saying the ‘employer class’ would just stick it in their pockets, we welcome their change of heart,” Mr Lucas said. “But we won’t be changing our commitment.

“Any upside we have with GST, we have other downsides and blowouts in health and child protection and TAFE.

“We’ve sensibly budgeted to have reductions in the Emergency Services Levy to start from July 1, but payroll tax will have to start from January.”   

The Government is also yet to release the full detail of its payroll plan, amid warnings from Labor it could cause job losses if charges are not carefully phased in once businesses go over the new $1.5 million threshold. Mr Lucas said the full tax rate would not apply until businesses hit a $1.7 million payroll threshold.

SA’s trend unemployment rate was 5.9 per cent last month, compared to a national average of 5.5 per cent.