Page 2647 - Week 08 - Thursday, 14 August 2014
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We have a tax that was intended to be a tax on employers, as payroll tax is. But what we have because of these arrangements is now real pay cuts for ordinary Canberrans. It is something that clearly the government did not want, and I do not hear anyone over there saying it is fair that these contractors receive a pay cut. Not one person has said it is fair, and that is why this bill is unfair. It is not a smart bill; it is a bill without foundation except for the tax grab that the Treasurer wants the revenue from.
There has been no analysis as to whether the exemption provides an incentive to set up your business in the ACT. I talk constantly about diversifying the economy and having more people in private employment. The government has lately taken up that line and said, “Yes, private employment is a good thing.” Well, here are people in private employment who are trying to make a go of it and you are about to tax them.
I could speak for some time on this, but I will let the people who are genuinely affected by this speak for themselves. Here is the situation faced by one contractor and a number of small businesses:
As things currently stand, my pay (which I negotiated in good faith in May) will be cut by 6.85% in a couple of months. It is just so unfair that the payroll tax harmonisation was announced without warning after I signed my contract. There is no prospect of the Commonwealth Government agreeing to an increase in my rate of 6.85% (as the rate has already been agreed), and the agency won’t absorb it either. I am not an employer paying millions in wages, yet somehow I am stuck with paying this awful tax (on top of the income tax that I already pay).
Another contractor:
My 1 year contract runs through to 8 July 2015, so the payroll tax change on 1 January 2015 would still result in a significant reduction to my salary next year (which as a single parent raising 2 kids, will be difficult to absorb). Ideally the change would commence on 1 July 2015 to allow me to try and negotiate a higher rate with the Commonwealth government for an extension to the contract.
This is what you are doing tonight, members, when you vote for this amendment.
As an independent contractor, we do not have an industry body, despite what others may try to pretend, they may be other self-interested parties that would simply pass the payroll tax on, so any discussions with middle persons is not a full perspective and biased and flawed view of the situation, as highlighted they are only a means to work around as the federal government would rather not deal directly with smaller companies/individuals, even though we are more cost effective than other means.
Another one:
We face the highest rate of payroll tax in the country as you know, and also have the highest tax-free threshold. It seems unfair that the big recruiters enjoy that threshold whilst we pay the highest rate of tax on every cent. All recruiters have stated they intend to pass on the full 6.85%. I have asked my agency if they would consider it only fair that the tax free threshold be apportioned across each
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