South Australian Treasurer Tom Koutsantonis promises tax cuts for small business are safe

TREASURER Tom Koutsantonis has guaranteed small business owners that they will receive promised payroll tax cuts, despite the government being unable to pass its Budget through Parliament.

Tom Koutsantonis has guaranteed small business owners that they will receive promised payroll tax cuts, despite the Government being unable to pass its Budget through Parliament.

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TREASURER Tom Koutsantonis has guaranteed small business owners will receive promised payroll tax cuts, despite the government being unable to pass its Budget through Parliament.

Mr Koutsantonis has also flagged an increase to a foreign investor tax included in the Budget to “make up some of the gap” caused by the removal of the $370 million bank tax.

And he has warned further savings will have to be made in his midyear Budget update, which he is expected to deliver next month.

Mr Koutsantonis made the announcements a day after the State Government gave up it’s fight to impose a tax on the five major banks, which would have reaped $370 million over four years.

The Liberals, Australian Conservatives and Advance SA MPs combined to block the Budget legislation in Parliament, which included the bank tax measure.

The government on Thursday introduced a separate piece of legislation to impose the Foreign Investor Surcharge on foreigners buying residential properties in South Australia.

The tax has been increased from four per cent to seven per cent to raise $85.4 million over four years, up $36.6 million from original forecasts.

It will need approval in Parliament but Mr Koutsantonis said he was confident of support from crossbench MPs.

Opposition treasury spokesman Rob Lucas on Thursday said the Liberal Party was inclined to support the foreign investor tax.

The seven per cent rate, which would take effect from January 1, is equal to that charged by the Victorian Government for a similar tax.

“There are a lot of South Australians that are being priced out of their own homes, their own suburbs, by foreign investors,” Mr Koutsantonis said.

“We’re not trying to stop foreign direct investment in large scale activity.

“(But) we don’t want people competing with South Australians (wanting) to buy a home to raise a family in ... turning up sight unseen on the telephone, from an overseas phone call, buying a house here.

“They’ll pay a penalty and we hope it will have disincentive impact on them.”

Mr Koutsantonis said he would deliver promised payroll tax cuts to small business owners by asking the Tax Commissioner to “consider all payments (to businesses) that haven’t been made because the Parliament blocked the measures as an administrative grant”.

“It’s clumsy, it’s clunky. It’s not as easy as passing new legislation but, unfortunately for those businesses, the Liberal Party blocked those tax measures,” he said.

“I’ll be writing to every small business letting them know their payroll tax cuts are safe and, after the election, the first Budget, we’ll be legislating this again.”

Since July 1, businesses with payrolls between $600,000 and $1m have been paying a tax rate of 2.5 per cent.

The drop from 4.95 per cent replaced a temporary small business payroll tax rebate, and was meant to lock in discounts of up to $9800 each year.

Mr Koutsantonis had previously warned businesses would be forced to pay back up to $9000 if the Budget was blocked.

Mr Lucas said that was an “attempt to bully the South Australian business community” but it had “failed spectacularly”.

Mr Koutsantonis he rejected suggestions that had created “fear and panic”.

The Treasurer said further changes would be revealed in the midyear Budget review, usually delivered in mid to late December.

He suggested there would not be any new measures to raise more funds, but confirmed “there will be efficiencies”

“There is now a hole in the Budget that we have to fix,” he said.

While the Government gained $1.6b from the sale of the Lands Titles Office - far more than it had expected - Mr Koutsantonis argued much of the windfall had since been committed to a $700 million school capital works program.