Australia’s peak retail body, the Australian Retailers Association (ARA) has welcomed measures to support small businesses in Victoria’s State Budget, but warned the new COVID Debt Levy will have economic consequences with Victoria now a very expensive place to do business.
The changes of most interest to retailers in the 2023/24 Victorian State Budget include:
- The payroll tax free threshold will be increased from $700,000 to $900,000 in the next financial year, up to $1 million in 2025.
- Businesses with national payrolls over $10 million per year will pay an additional5% payroll tax for the next decade. Businesses over $100 million per year will pay a further 0.5%. (a total of 1.0% increase for $100 million+ businesses)
- Stamp duty on commercial and industrial properties changed to an annual property tax, applying 10 years after purchase.
- Phase out of the benefit of the tax-free threshold for larger businesses.
ARA CEO Paul Zahra described the Budget as a “mixed bag”. He praised sensible concessions for small business, but warned increased taxes on large retailers may lead to job cuts or costs being passed onto consumers.
“Today’s Budget contains some positives for small business, but the wider economic implications are concerning,” Mr Zahra said.
“While we understand the Government’s desire to repay debts accrued during the protracted pandemic lockdowns, we’re very concerned about the ramifications of payroll tax hikes on businesses. In effect, payroll tax is a tax on jobs.
“The cost of doing business is at crisis point for many retailers – from the costs of goods and services to supply chain costs, higher wages, higher rents and costs associated with retail crime.
“These new and increased taxes are likely to manifest in job losses and increased prices for customers which further contributes to the cost of living crisis.
“Last week, the Government announced increases to WorkCover premiums and today significant increases to payroll tax – Victoria is one of the most expensive Australian states to do business.”
However, Mr Zahra welcomed the Government’s decision to raise the payroll tax free threshold for small business, up to $1 million by 2025.
“This new $1 million threshold better serves small business. Wage growth has remained strong over recent years, so it’s great that the payroll tax free threshold will reflect this,” Mr Zahra added.
“This is especially valuable for new small businesses, to have a wider net of tax relief while they’re first getting off the ground.
The ARA also welcomed funding to support the delivery of an expanded state nomination visa program – streamlining access to skilled labour and praised the Government’s plan to abolish business insurance duties – reducing 1% each year from 2024.
An investment of $30 million in the Business Acceleration Fund will support regulators to make it easier for small businesses to innovate and grow.
Mr Zahra said he looks forward to engaging with the state’s first Economic Growth Commissioner who will investigate productivity opportunities and make recommendations on growth impediments that need to be addressed.
“Victoria represents a quarter of the Australian retail economy so its critical that we see policies that help rather than constrain growth,” he said.
ENDS
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