Businesses back GST increase in exchange for state tax relief
South Australian businesses are backing an increase in the GST if it leads to state-based costs such as payroll tax being wound back.
The majority of SA businesses in this year's BDO State Business Survey would back an increase in GST if it led to relief from other state taxes.
Almost two-thirds of businesses who have so far responded to this year’s BDO State Business Survey have backed a GST hike as a way of boosting job creation without causing additional pain on the state’s already stretched bottom line.
The 65 per cent result is significantly up on the past three years when only about half of respondents to the survey supported a GST increase if it meant relief from state taxes.
This year’s BDO SA State Business Survey is shaping as the most important in recent years as local companies assess the damage from the coronavirus pandemic and map out their futures.
To coincide with the launch of the 7th annual State Business Survey last month, business leaders took part in an online webinar Rethink the Direction for Business in South Australia.
SA Small Business Commissioner John Chapman said removing state taxes such as land tax and payroll tax via a GST increase would deliver significant reform.
“Employers could just get on with employing people whereas at the moment we have this inbuilt barrier – we could argue about whether our rate is lower than other states but nonetheless it is a tax on creating employment,” he said.
“By contrast the state does have to raise revenue and it’s always difficult but I think a look at GST would be a good start.
“Whether the time for that is right is a question because most people at the highest levels of government are still consumed with keeping their communities safe.”
A payroll tax liability of up to 4.95 per cent arises in South Australia when an employer (or a Group of employers) has a wages bill in excess of $1.5 million
South Australia’s GST dividend from the Federal Government has taken a number of blows in recent times including a $517 million write down in 2019-20.
Last month’s Federal Budget confirmed a GST write-down for SA of more than $1.3 billion in 2020-21 with further cuts foreshadowed in future years.
St Vincent De Paul Society SA CEO Louise Miller Frost told the recent BDO webinar that people without much money would be the most negatively impacted by an increase in the cost of goods and services.
“The people who are spending every last cent to survive and turn up to Vinnies to get assistance because they can’t pay their bills – those people will be inordinately affected by an increase in GST,” she said.
“What that will mean in the economy is that there is a drop in demand.
“While lower payroll tax might lead to more employment, ultimately what leads to more employment is demand – you have to know that you can make the sale before you put the additional person on.”
The 15-minute survey is still open until Wednesday and will provide crucial insights into the state’s economic recovery results to not only the broader community but those in positions of influence.
The results report will be released later this month.
Click here to participate in the survey.
