Allan declares Victoria ‘open for business’, reveals plan to slash payroll tax

Premier Jacinta Allan will on Sunday declare the state is “open for business” — set to reveal the tax-free threshold on payroll tax will be lifted to $1 million.

Payroll tax will be cut for tens of thousands of businesses and red tape strangling pubs and restaurants will be slashed, as part of a new Allan government productivity push.

Premier Jacinta Allan will on Sunday declare the state is “open for business” as she reveals the tax-free threshold on payroll tax will be lifted to $1 million.

The change means 6000 businesses won’t fork out any payroll tax, while a further 22,500 businesses will have a reduction in the state slug worth up to $14,550 a year.

Pubs, restaurants and cafes will no longer have to apply to both councils and state regulators for liquor licences under other July 1 changes, and a temporary waiving of planning permits for outdoor dining will become permanent.

The premier is also signalling a healthy appetite for national tax and regulatory reform when a national roundtable to drive growth and private investment is hosted by federal treasurer Jim Chalmers this year.

Premier Jacinta Allan is set to declare Victoria ‘open for business’ as she announces plans to slash payroll tax. Picture: Nadir Kinani

Victoria has been criticised for hiking dozens of taxes and introducing new levies since Covid-19 pummelled the state, while its net debt is set to skyrocket to $194 billion within four years.

Business groups have been calling for reforms to kickstart growth, including to reform inefficient taxes and encourage investment in key industries.

The Herald Sun can reveal the Allan government will put forward a six-point productivity plan to the national roundtable in August, including to replace a “patchwork” of state taxes with more efficient broadbased national taxes — with the premier set to evoke memories of former prime minister John Howard’s introduction of the GST.

The state will also push for planning reforms to usher in more housing, a boost to early education services to get more people back to work, and quicker delivery of energy projects.

Ms Allan said the increasing the point at which payroll tax kicks in to $1m, and cutting red tape for the hospitality sector, was about “jobs, jobs, jobs”.

“Behind every job is a worker, behind every small business is a family – and I’m on their side,” she said.

“Our cafes, bars and restaurants are what we’re famous for. Let’s give them a hand so they’re not drowning in red tape.”

Jacinta Allan says cafes, bars and restuarants are currently ‘drowing in red tape’ in Victoria. Picture: Nicki Connolly

The national productivity roundtable announced by Mr Chalmers is viewed by business groups as a key opportunity for real reform to revive sluggish national and state economies.

Victorian Chamber of Commerce and Industry chief executive Paul Guerra said it must find a way to axe duplicate taxes, while making Victoria a hub for artificial intelligence and advanced manufacturing in defence industries.

“Our view is really simple; we can’t tax our way out of this,” he said.

“We need to get on the growth train and productivity is at the core of that and having the right ideas with the right funding and clear messaging from state and federal governments will enable business to invest.”

Paul Guerra says Victoria must find a way to axe duplicate taxes to ensure business productivity.

Mr Guerra pointed to Saudi Arabia, where $200bn was recently sunk by its government to attract AI-businesses, and said Avalon and Fishermans Bend were ideal places for a local industry that would make Victoria “a leader in AI for Asia Pacific”.

“AI will bring real disruption but we can use it to propel productivity improvement,” he said.

The Allan Government has been cautious on AI advances, urging the Commonwealth to create a strong industrial relations framework first to protect existing jobs and security.

Mr Guerra said the Commonwealth should also consider bailing out Victoria with a $50bn loan on Covid-19 debt, with the state using interest saved to turbocharge emerging industries such as critical minerals.