Adir Shiffman: Victorian budget’s “shameful” payroll tax change will drive businesses interstate

Not content with increasing the second most regressive tax — stamp duty — the Victorian government has stepped it up a level. 

It’s now increased the single most regressive of all taxes: the tax on jobs, payroll tax.

Under changes announced in yesterday’s state budget, businesses in Victoria with payrolls of more than $10 million will have to pay an additional payroll tax surcharge.

This is not about Liberal or Labor, but rather about the need to return Victoria to Australia’s most competitive state.

Every other state will be rubbing their hands in glee. New South Wales has been consistently reducing payroll tax, as have other jurisdictions.

Any sane Victorian medium or large business will now consider shifting their hiring interstate. And any foreign business looking to open an office locally will have yet another reason to choose NSW, Queensland or South Australia over Victoria.

This is shameful by the government and sends a terrible message that will resonate for years beyond their term in office.

By the way, many of the largest consultancies pay their partners $1 million and completely avoid payroll tax. It’s also not payable on dividends. 

Payroll tax should go entirely as part of a wider and urgent tax reform, because it costs Australian jobs. 

Mental health is one of the most important funding needs we have right now, in no small part due to Victoria’s 112-day lockdown, but this is not the way to fund it.

This is an edited version of an article that first appeared on LinkedIn.