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Legislative Assembly for the ACT: 1996 Week 8 Hansard (26 June) . . Page.. 2156 ..

Mr Berry: That is not what you said.

MRS CARNELL: It is, you will find. When we actually looked at the $25m that the ACT Government was going to have to find and when we looked at the approach that we have in our policy - which is, wherever possible, to keep our taxes and charges in line with those of New South Wales - we determined that the approach that New South Wales had taken was probably the fairest and most equitable way to address the $25m gap. But the reality is that we did not address the $25m gap with extra taxes and charges; we addressed less than half of it. So, just over $10.4m will be addressed by the increase in taxes. That is in line with New South Wales. It is exactly what the New South Wales colleagues of those opposite decided to do. We believe strongly that the approach we have taken is the fairest and most equitable way to address the significant shortfall that the ACT taxpayers have. Of course, we have not put up rates, or the sorts of charges that average Canberrans pay every day, above CPI in most cases. Yesterday, we passed the Rates and Land Tax (Amendment) Bill, which increased rates and land taxes by 3 per cent, in line with inflation.

Mr Speaker, we believe that the approach we have taken is the best approach for Canberra. But we did not just increase payroll tax in line with New South Wales. We will also increase the threshold, which is the level over which payroll tax is payable. At the moment, it is $600,000. From 1 January next year, it will go to $700,000. The year after that, it will go to $800,000. Mr Speaker, that means that, on 1 January next year, for a medium-sized business in the ACT - say, somebody with 30 employees, paying them, on average, $30,000 a year - the payroll tax bill in the ACT will be just over $13,000. In New South Wales it will be over $20,000, Mr Speaker. So, it does show that small to medium businesses - the sorts of businesses that we predominantly have here in Canberra - will be substantially better placed here in Canberra than they will be next-door in New South Wales.

Mr Berry: Go and ask them.

MRS CARNELL: Mr Berry, I must admit that I would prefer to pay just over $13,000 than over $20,000 in payroll tax. Possibly Mr Berry perceives that people would prefer to pay $20,000, out of the goodness of their hearts; but I am absolutely confident, Mr Speaker, that the vast percentage of small to medium businesses would much prefer to be in the ACT, with a threshold of $700,000 and $800,000. What it means in the ACT is that fewer businesses will actually pay payroll tax at all. We are targeting those businesses that are the major growth employers in this city; that is, the small to medium businesses.

So, the approach we took, although in line with New South Wales, also had another element to it, which meant that we would be giving, I suppose, a better financial situation to those small to medium businesses that this Government is in the business of encouraging - encouraging to employ and encouraging to grow. We believe that that is a tax that is well focused but a tax that we would prefer not to have put on.

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