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Payroll tax pledge

The Victorian Coalition has promised to reduce payroll tax for up to 28,000 businesses if it wins the State Election on November 26.

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The policy will increase the threshold at which a business becomes liable to pay payroll tax from $700,000 to $1.6 million, and phase in the payroll tax rate for businesses with a payroll between $1.6 million and $2 million.

Under the change, around an additional 13,300 small businesses will pay no payroll tax whatsoever, while another 14,700 small businesses with a payroll of between $1.6 million and $2 million will receive a tax reduction of up to $43,650.

Bigger businesses with a payroll of over $2 million per year will not be affected by the changes.

Currently, Victoria is the only jurisdiction with a payroll tax threshold below $1 million.

Victorian Liberal Party Leader Matt Guy said: “Small and family businesses are the backbone of our economy and deserve to be supported to get back on their feet.”

“Our changes will make Victoria the most competitive state for payroll tax for small business, meaning more jobs and a stronger economy for all.”

The Victorian Chamber has been strongly advocating for a change to the current payroll tax threshold.

While developing our State Election Platform, Powering Victoria’s Future, members consistently told us that making our payroll tax more competitive was a priority for business.

Victorian Chamber chief executive Paul Guerra said: “We welcome this policy which is consistent with what our members have told us they want. The Victorian Chamber has strongly advocated for a change to the current payroll tax threshold through our State Election Platform, Powering Victoria’s future.

“We want Victoria to be the best state to own and operate a business, and competitive state taxes play a vital role in stimulating business investment and job growth. Payroll tax is a disincentive to employ more staff, and Victoria’s threshold means Victorian employers pay more tax for having more employees.

“This is not only counterintuitive to Victoria’s goal of a higher wage economy but makes the taxation system less competitive compared to other states.”

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