Shadow Minister for Small Business and Regulatory Reform and Member for Ballina Don Page says the payroll tax cuts announced in this week’s State Budget are not nearly enough to make NSW businesses competitive with States like Queensland.

And his Lismore counterpart, Thomas George, has also criticised the cuts (see below).

“NSW businesses will still pay much higher payroll tax in terms of the rate paid and have lower exemption thresholds,” Mr Page said.

“NSW remains extremely uncompetitive with other States on payroll tax.

“Reducing the payroll tax rate by 2011, to 5.5% still puts NSW a long way short of Queensland’s current rate of 4.75% and Victoria’s rate of 4.95% from July 1 this year.”

The State Government also announced that it would index the payroll tax threshold to the CPI, which raises the threshold this year to $623,000.

“Again, this measure is a long way short of what is needed,” Mr Page said.

“In Queensland, for example, the threshold before payroll tax is payable is $1million.

 “The Coalition policy at the last election was to raise the payroll tax threshold to $1million. 

“This would bring NSW into line with the current payroll tax threshold in Queensland.

“If the NSW Labor Government wants NSW business to become competitive it will need to get serious about cutting the payroll tax rate and increasing the payroll tax threshold.”

Mr Page said the State Government also needed to reduce the number of taxes it imposed on small businesses.

“There are currently around 23 State taxes that small business could pay,” he said.

“The Iemma Government is the highest-taxing Government in Australia. 

“It also burdens NSW business with the most red tape. 

“A recent survey revealed small business in NSW spend 20 hours per week on red tape compared to 15 hours in Queensland.

“NSW businesses need a lot more pain relief than the latest budget has given them.

“I urge the NSW State Government to take further steps to ease the tax and red tape burden on NSW business so they can become competitive with other States.”

Lismore MP Thomas George said businesses in northern NSW were worst hit because of their proximity to the Queensland border.

“Even when the NSW reforms are fully phased in by January 2011, our payroll tax will still be 5.5 per cent with a threshold of about $700,000 compared to today’s Queensland 4.75 per cent with a $1 million threshold, ” Mr George said.

“That means a Northern Rivers business with a $900,000 wages bill will pay $54,000 this year and $49,500 in 2011, but a similar size business over the border pays nothing.”

Mr George, whose electorate includes part of the Tweed and Murwillumbah, said firms as far south as Lismore were losing out to their Queensland competitors because of payroll tax.

“The real problem is the threshold,” Mr George said.

“It is very hard to compete when you have to factor a thousand dollar-a-week payroll tax bill into your quotes for work.”

The issue provided for a heated exchange in Parliament this week, with Premier Morris Iemma quoting media comments by Tweed Economic Development Corporation CEO Tom Senti to claim the budget had its support.

Mr George said those quotes were selective to the point of being misleading.

“We all agree any reduction in payroll tax is a step in the right direction, but this doesn’t alter the fact that it is still much cheaper to do business in Queensland, particularly when you take into account other taxes like stamp duty and land tax which are higher in NSW,” he said.