Land 400 project: State Government accepts payroll tax a barrier to job creation

Monday 10 July, 2017 | By: James Flaherty

The Chamber of Commerce and Industry Queensland (CCIQ) says it’s behind “Team Queensland” in securing the Land 400 phase 2 project, but urged the State Government not to favour big businesses over small businesses. 

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In a bid to secure the $5 billion project, one of the Defence Department’s biggest projects in history, the Queensland Government is set to do “whatever it takes” with land and payroll tax concessions highly likely to be offered.

CCIQ Senior Policy Advisor Catherine Pham said the benefits of the project being located here are undisputed, but small businesses will be rightly angered by the State Government’s evident preferential treatment of big businesses when it comes to tax.

“The project means local manufacturers are set to benefit from supply chain and maintenance work for the next three decades,” Ms Pham said.

“Securing the project will be a huge boost to the State’s economy, assist in the transition post-mining boom, and lift public confidence on the performance and ability of the Palaszczuk Government to get things done.

“But the offer specifically of payroll tax concessions has affirmed what CCIQ and many small businesses have been saying year on year: payroll tax is a barrier to job creation.

“The State Government, through their bid for the Land 400 project, has implied that getting rid of the payroll tax is key to luring projects to Queensland.

“No matter what the size or investment of new businesses, payroll tax should now be publicly accepted as inhibiting the creation of long-term sustainable jobs growth.  

Ms Pham said calls from small businesses to address the constrictions around payroll tax have long been ignored.

“We have been calling on the previous three State Governments to abolish the payroll tax, with steps to at least raise the threshold in the short term,” she said.

“Heading into a State Election, it will be crucial for both side of politics to look at tax reform and consider progressive and positive changes to the payroll tax if they want to get small businesses on side.

“We will be lobbying hard on this matter leading up to the election, and will show our support for any policies that lifts this cap on employment.

“CCIQ modelling shows that increasing the threshold to $1.5 million from $1.1 million would create more than 2,000 jobs in the private sector.

“In contrast, the Land 400 project is expected to create over 250 jobs, with State Government rumoured to have offered a total of around $400 million in sweeteners in its bid for the multi-billion dollar project.

“If the Government wants businesses to invest in Queensland without having to offer incentives each and every single time, they’ll need to look at reforming the current State tax system starting with payroll tax.

Ms Pham said for small businesses, the payroll tax is seen as a tax on employment and a penalty for giving someone a job.

“The biggest impact payroll tax has on business decision making occurs when the total payroll approaches the exemption threshold.

“The effective marginal cost of employing additional labour, or awarding a wage rise, increases once the employer moves through the exemption threshold and becomes liable for payroll tax.

“As a direct result, payroll tax limits the expansion of small and medium businesses in Queensland, particularly those below but approaching the tax-free threshold.

“We want our small businesses to grow into big businesses, yet the State Government is giving them a reason not to.”

Ms Pham said despite its position on the payroll tax, bringing the Land 400 project to Queensland will be widely supported by the State’s business community.

“CCIQ will be behind the bid to bring the project here, particularly as the winner of phase 2 will most likely go on to win phase 3, which is worth up to $15 billion.

“It makes absolute sense that the project is Queensland-based. Around 70 per cent of the 225 armoured combat reconnaissance vehicles to be built in phase 2 will eventually be based in Queensland to support brigades at Enoggera and Townsville.

“We’ve also got 40 per cent of the army based here in Queensland, over 11,000 personnel, so that should certainly put us at an advantage.” 

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