Victoria budget a ‘mixed bag’, ARA

The Australian Retailers Association (ARA) welcomes measures to support small businesses in Victoria’s state budget but warns of payroll tax hike consequences.

According to the ARA, 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 additional 0.5% payroll tax for the next decade. Businesses over $100 million per year will pay a further 0.5% (a 1% increase for $100 million-plus 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.

The budget has been described as a “mixed bag” by ARA CEO Paul Zahra.

Economic implications ‘concerning’

Mr Zahra praises sensible concessions for small business but warns increased taxes on large retailers may lead to job cuts or costs being passed onto consumers.

“[The] budget contains some positives for small business, but the wider economic implications are concerning,” he says.

“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 [in the budget], significant increases to payroll tax. Victoria is one of the most expensive Australian states to do business.”

The positives

Mr Zahra, however, welcomes 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,” he says.

“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 welcomes funding to support the delivery of an expanded state nomination visa program (streamlining access to skilled labour) and praises the government’s plan to abolish business insurance duties, reducing 1% each year from 2024. The organisation adds that an investment of $30 million in the Business Acceleration Fund will support regulators to make it easier for small businesses to innovate and grow, too.

Mr Zahra says 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 it’s critical that we see policies that help rather than constrain growth,” he says.

Similar Articles

Instagram

Most Popular

Subscribe to our newsletter

To be updated with all the latest news, offers and special announcements.