State Budget Delivers on Payroll Tax Cuts, but Illawarra Misses Out on Record Infrastructure Spend

State Budget Delivers on Payroll Tax Cuts, but Illawarra Misses Out on Record Infrastructure Spend - 3 Jun

The regions peak business organisation, the Illawarra Business Chamber, has welcomed the cut�s to the State�s Payroll Tax announced in today�s State Budget as it will help insulate NSW from external economic pressures.

The Budget provides $1.9 billion in cuts to payroll tax over the next four years with the payroll tax rate reducing to 5.75% from 1 January 2009, 5.65% from 2010 and 5.5% in 2011.� The current $600,000 threshold will increase to $623,000 from 1 July 2008 and will rise thereafter in line with Sydney CPI.

�Having campaigned in conjunction with NSW Business Chamber to cut the payroll tax rate for many years, the decision of Premier Iemma to honour the commitment he made in 2006 to the NSW Business Chamber Council to cut payroll tax is particularly gratifying.�

�The decision to index the payroll tax threshold to Sydney CPI will ensure that the NSW payroll tax system stays competitive.

�When coupled with the 30% reduction in workers compensation costs outlined by the Government over the past two years, we are beginning to see a major improvement in the taxation burden on NSW and indeed Illawarra businesses.

However whilst the Budget did include a record $57 billion infrastructure program, there were no new major infrastructure projects announced for the Illawarra.�

IBC said it would continue to work with the State Government to ensure that major projects such as the F6 Extension, Picton Road and others make in into future Budget papers.

�Major investments in infrastructure are about improving the economic capabilities of the region.� Given the challenges we face here in terms of unemployment and the large commuter population forced to leave each day to find work, we need to be working harder to ensure that the future needs of the region are meet.�

It should also be noted that electricity assets are off-budget and as such, the balance sheet will improve as the assets are realised, providing further scope to upgrade the States infrastructure.

IBC said it supported the Government�s decision to tie further public sector wages rises to the RBA inflation target with wage increases over and above 2.5% tied to productivity growth.

�There is no question the Government is making life more difficult for itself in committing to this target, but this is the right approach to ensure the sustainability of the Budget.� It will also ensure that government agencies are focused on productivity improvements.

Mr Grimson said the treasury has correctly identified the external pressures on the State and the infrastructure program and payroll tax cuts will assist the State�s businesses in dealing with these pressures.

�Rising interest rates, petrol prices, a rising currency, drought and international equity market volatility will in coming months take their toll.� We have already seen falls in business confidence,
housing finance and retail trade and this indicates that growth is already slowing in NSW.� However, the Budget is in a strong position to deal with this due to increases in GST revenues and stronger than expected economic and employment growth during the past year.�

Illawarra Business Chamber has over 650 members which employ over 42,000 across the Illawarra Region.

For further information please contact Mark Grimson on 4229 4722 or 0409 155240