Business NSW has proposed a Commonwealth-led review of various tax platforms, including payroll tax, stamp duty, company tax, and the GST. According to Business NSW, NSW businesses should a significant burden in payroll taxes, averaging $2,688 per staff member, surpassing the national average and constituting about a third of NSW’s revenue. This ranks NSW third, trailing WA and the ACT, making all states heavily reliant on this tax, which has seen dramatic increase since the pre-pandemic levels of 2018-2019.

Daniel Hunter, CEO of Business NSW, emphasized the necessity for a more efficient and globally competitive tax system to support business growth. The group advocates for tax reform through federal and state collaboration, urging action via the Council of Federal Financial Relations. Hunter stressed the importance of distributing tax burdens more equitably to stimulate economic growth.

In its pre-budget submission, Business NSW highlighted payroll tax as a priority for businesses, suggesting measures to reduce administrative burdens and digitize systems to prevent errors. While supporting the abolition of payroll tax, the group deferred to the Henry review on alternative options.

The Henry review, for context, was a comprehensive review of Australia’s tax system conducted by economist Ken Henry and his team. It criticized payroll taxes as inefficient and disproportionately impactful on state revenues. The review advocated for a shift towards a low-rate, broad cash flow tax, arguing for a tax regime that minimises welfare loss.

Hunter underscored the urgency of Commonwealth involvement in tax reform, citing NSW’s grievances regarding GST distributions. NSW Treasurer Daniel Mookhey warned of the adverse effects of the current distribution on the state’s ability to fund key initiatives.

Overall, Business NSW calls for comprehensive tax reform to alleviate the burden on businesses and foster economic growth, emphasizing the need for federal and state co-operation in achieving this goal.