Regional business owner Kirsten Pitman joins calls for overhaul of payroll tax system, increase in tax threshold

A regional business owner has opened up on the impact of tax on her bottom line – and joined calls for changes to the payroll tax system.

A regional business owner says she is facing “tough decisions” on trading hours, staff and wages because of the impact of payroll tax – and has joined calls for the system to be overhauled.

The opposition is urging the state government to lift the current payroll tax threshold – the amount a business’ wage bill reaches before the tax kicks in – from $1.5m to $2.1m.

Kirsten Pitman, owner of restaurants Ninos Cafe and Loco Mexican at Victor Harbor, said her business had not had to pay since the threshold was last raised several years ago – but their wage bill has now caught up.

Kirsten Pitman says the payroll tax system should be overhauled. Photo: Kelly Barnes

She said the threshold should be adjusted annually in line with rising costs, and the system should be tailored by industry.

“Hospitality operates with average wage costs of 50 per cent of turnover,” she said.

“It is unfair to lump different industries under one calculation,” she said.

Ms Pitman said the system discouraged growth and employment for businesses like hers.

“The result is that those businesses affected will need to make some tough decisions on trading hours, staff numbers, and above award wages – and this will be a poor outcome for our regional business, the staff we employ and the community we service,” she said.

Opposition Leader Vincent Tarzia said raising the threshold to $2.1m was “a simple change that could save businesses tens of thousands of dollars per year whilst also safeguarding the future of the South Australian economy”.

“These businesses are not just pivotal to the state’s economy, but also the livelihoods of everyday South Australians who work tirelessly to keep their staff on the floor and money coming in,” he said.

Finniss MP David Basham said he wrote to the government on October 8 to express growing concern about the impact of payroll tax on businesses in his community – but said he has not yet received a response.

Treasurer Stephen Mullighan said South Australia’s unemployment rate continues to be at historic lows, “indicating that payroll tax is not the barrier to employment claimed by the Liberals”.

“While payroll tax cuts in a tight labour market are not being considered, the Malinauskas Labor Government is providing other support for the sector, including through the $154m Economic Recovery Fund,” he said.

“On Sunday, the state government announced it was providing up to $30m to South Australian small businesses to lower their power bills with the help of Energy Efficiency Grants, on top of the energy bill reductions provided to around 50,000 businesses in last year’s state budget.

“The Liberals need to outline how much their policy would cost, how many businesses would benefit and how many more jobs they believe it will create.”