Payroll tax cut as part of $3.6 billion reduction in taxes
3 June 2008
NSW Treasurer Michael Costa today said the 2008-09 Budget cut taxes by $3.6 billion, including cutting payroll tax from 6 per cent to 5.5 per cent and indexing the payroll tax threshold.
New tax cuts announced today are worth $2.2 billion, including the $1.9 billion cut to payroll tax to support jobs and economic growth.
The new changes are:
- • Cutting payroll tax from 6 per cent to 5.5 per cent in three stages;
- • Indexing the payroll tax threshold to inflation; and
- • The early abolition of stamp duty on non-land business assets.
This is on top of tax cuts that will start to take affect this year, including:
- • Abolishing mortgage duty on residential investment properties from 1 July 2008; and
- • Abolishing stamp duty on unquoted marketable securities from 1 January 2009.
"This Budget builds on the Iemma Government's record of cutting taxes by reducing the impost on business and making further reductions to property-related taxes," Mr Costa said.
"When Labor came to Government payroll tax was 7 per cent and the threshold was $550,000.
"We've now indexed the threshold - making NSW the only jurisdiction in Australia to do this - as well as reducing the rate from 6 per cent to 5.5 per cent.
"Tax cuts must be implemented without jeopardising funding for essential services, that's why the rate will be phased, dropping to 5.75 per cent from 1 January 2009, to 5.65 per cent from 1 January 2010, and to 5.5 per cent from 1 January 2011.
"The threshold will increase from $600,000 to $623,000 from 1 July 2008, rising each year with the Sydney CPI.
"In total, changes to payroll tax announced today will exceed $1.9 billion over the next four years and will benefit all of the 28,000 payroll-tax-liable businesses in NSW.
"When fully implemented a medium-sized company with a $1 million payroll will save around 20 per cent off their payroll tax bill."
Mr Costa also announced transfer duty on non-land business assets would be abolished 18 months earlier than planned - brought forward from 1 July 2012 to 1 January 2011 - a further tax cut for business of $270 million over the next four years.
The Budget also sees the implementation of a number of tax cuts announced last year: the abolition of mortgage duty on residential investment properties from 1 July 2008 and the abolition of stamp duty on unquoted marketable securities from 1 January 2009.
"The abolition of mortgage duty on residential investment properties will save property investors $160 million in 2008-09 and $718 million over four years," Mr Costa said.
"The abolition of stamp duty on unquoted marketable securities will save business $36 million this year and $272 million over four years.
"In total this Budget reduces taxation by $344 million in 2008-09, increasing to $1.4 billion in 2011-12, and by $3.6 billion over the next four years.
"Over the four years to 2011-12 Iemma Government tax cuts and reductions in workers compensation premiums will save NSW taxpayers $12.4 billion."
Mr Costa said the Iemma Government had made significant tax cuts while NSW continued to be penalised on the GST.
"NSW's revenues compare very favourably with other states," Mr Costa said.
"NSW has lower revenue per capita than the average of the other states, and the second lowest revenue per capita of all the states.
"NSW's overall tax rates are around the average of all states, with a lower than average reliance on transfer duty, gambling taxes and motor vehicle taxes."
