Tasmanian businesses say state government must not cut spending or raise taxes to fix budget crisis

Business groups have demanded the government neither cut spending or increase taxes as the state struggles with a budget sustainability crisis.

Economist Saul Eslake at Hobart. Picture: Chris Kidd

Business groups have demanded the government neither cut spending or increase taxes as the state struggles with a budget sustainability crisis.

A report into the state’s finances by noted economist Saul Eslake found government policy was undermining the state’s long-term prospects.

It recommended increasing taxes – notably payroll tax, vehicle registration and mining royalties.

Tasmanian Small Business Council has slammed the payroll tax proposal.

“Mr Eslake seems to be obsessed with wanting to tax Tasmania’s 41,000 small business more,” TSBC chief Robert Mallett said.

“Small business in under significant pressure from things like energy prices, inflation and rising costs, increasing mainland and online competition and ever-rising wage bills – all this and more, in a sluggish economy.

“It beggars belief that Mr Eslake thinks that whacking small business with yet another tax is going to do anything other than drive small businesses to the wall, and how that assists the Tasmanian economy is a mystery.

Small business advocate, Robert Mallett. Picture: Linda Higginson

“Any politician or political party who support reducing the tax-free threshold for payroll tax is hopelessly out of touch and need their heads read,” Mr Mallett concluded.

“Tasmania needs to be a small business magnet, not a small business deterrent.

The Civil Contractors Federation Tasmania said the government must not cut spending.

CEO of CCFTas, Andrew Winch said with a fragile local economy, the last thing that is needed is a reduction in infrastructure spending at the upcoming state budget.

Civil Contractors Federation Tasmania chief executive Andrew Winch. Picture: Stephanie Dalton

Mr Winch’s comments come in the wake of a report by Economist, Saul Eslake suggesting among other things, the state should cut back infrastructure spending.

“Civil contractors are the backbone of the Tasmanian economy and roll out their services throughout rural and regional Tasmania, any reduction in such activity would have a devastating flow-on effect,” Mr Winch said.

“The reason why the sector has been calling for a pipeline of activity is to ensure there is a flow of work in civil construction so that businesses can make longer-term investments and employ people securely.

“If this spending was now to be cut, many of our members would be facing significant impacts to a reduction of activity,” Mr Winch said.

Executive director of Tasmanian Property Council of Australia Rebecca Ellston. Picture: Nikki Davis-Jones

But Property Council state director Rebecca Ellston said stamp duty reform had merit.

“Stamp duty is a direct handbrake on people’s ability to follow new job and life opportunities.

“It distorts behaviour, lowers turnover, locks people into inappropriate housing, dampens construction and reduces affordability.

“Over-reliance on stamp duty also subjects a state’s bottom line to the cyclical nature of the property market – making it inherently hard to budget and subjecting fiscal planning to year-on-year risks.

Minister for Finance Nic Street, said Labor wanted to raise taxes.

“Make no mistake, the Tasmanian Labor Opposition would follow their Victorian counterparts and raise taxes to the detriment of everyday Tasmanians,” he said.

“It seems Tasmanian Labor plans to rip $500m per year from the pockets of Tasmanians and small businesses.

“Tasmanians cannot afford the Labor Opposition’s cruel tax grab.”

Last week’s Preliminary Outcomes Report released by Treasury showed the Liberal government delivered a record deficit of more than a billion dollars more than was expected in 2023-24 of $1.5bn.