Legislative Assembly for the ACT: 2001 Week 3 Hansard (7 March) . . Page.. 768..
MR HUMPHRIES: Mr Quinlan can fish these figures out but he knows very well that this government has done the hard yards. It has made the difference to the bottom line and the reported and audited figures for each year that we have been in office demonstrate the extent of our achievement.
MRS BURKE: My question is to the Treasurer, Mr Humphries. Can the Treasurer advise how the changes in the threshold for payroll tax will impact on local business?
MR HUMPHRIES: Yes, Mr Speaker, I can. I thank Mrs Burke for the question because the impact of these changes bears repeating. The budget for this year provided for a staged process of raising the threshold for payroll tax in this community. From 1 January this year, we raised the threshold for payroll tax from $800,000 to $900,000.
Mr Quinlan: Budget Paper No 3, page 78.
MR HUMPHRIES: Unfortunately, not all people read the budget documents so it is worth repeating and reminding some people about these things.
It is also worth reflecting that what we have done has amounted to a reduction in government revenue from payroll tax. Do you not think that would have some effect on the bottom line? You would think it would affect the operating result in some way, wouldn't you. But apparently not. I cannot understand that. I had better get back and read my text books again.
As I said, from 1 January this year we raised the threshold for payroll tax from $800,000 to $900,000. The threshold will rise again on 1 July this year to $1.25 million. It will rise again on 1 July 2002 to $1.5 million. This represents the biggest tax relief given to ACT businesses in this critical area of payroll tax. I would hope that we would all agree that this is an iniquitous tax-a tax on employment; a tax that discourages businesses to make a decision to recruit that extra person when they might have the chance, because of the growth of their business or demands on their business, to do so.
We believe that it is appropriate to take those sorts of measures to stimulate the viability of employment in ACT businesses. We have a record of doing this over a period of some years. In 1996 we lowered the payroll tax rate from 7 per cent to 6.85 per cent. In 1998 we raised the threshold from $700,000 to $800,000.
I will give you an example of how this might impact on a small to medium business in the ACT. Let us suppose a business has a wages bill of $1.45 million. Under Labor that business was paying $63,000 in payroll tax. We are talking about a full position of a person in that firm-perhaps even two in some businesses. We have now cut their payroll tax by $18,475. In July that business will be paying $13,700. So this government will have cut their bill by $49,300 or 78 per cent. From 1 July next year, that business, which was previously paying $63,000 in payroll tax, will be paying not one cent. That is an opportunity for business to grow in this community. I know that this is disconcerting for Mr Stanhope. I know he his not happy about business getting this benefit. But the fact is this has produced the jobs that this city needs.