Business SA has focused its State Budget submission on a call for the Government to provide substantial tax relief for business.

Business SA’s State Budget Submission 2011-2012 reinforces the key issue that has been identified as a major concern for the business community.

The submission, which was hand-delivered by Business SA to the Treasurer earlier this month, focuses on what is critical to the long-term economic sustainability and competitiveness of South Australian business.

The key recommendations include:

- Pursue further increases in land tax thresholds and cuts in land tax rates

- Pursue further increases in the payroll tax threshold and cuts in the payroll tax rate

- Call for a far more comprehensive response to the Henry Taxation Review

- Encourage the reform of State taxes, including abolishing many of the small and inefficient taxes and charges in return for national tax reform and higher revenue from the Commonwealth Government.

Business SA Chief Executive Officer, Peter Vaughan, said that given the challenges that remain throughout the local economy, the time had come for the Government to make bold decisions on State taxes.

“We acknowledge that the upcoming State Budget will again be tough, however it must make a positive impression on the local economy,” Mr Vaughan said.

“Local businesses performed well throughout the economic downturn, however since that time the South Australian economy has underperformed compared to most of the rest of the country.

“The current taxation burdens on South Australian businesses are having a direct impact on jobs, it’s as simple as that.”

Mr Vaughan acknowledged the recent efforts of the State Government to improve infrastructure, to increase the efficiency and reduce the size of the public service, to reduce red tape and to reform the vocational education and training system.

“One major policy area where substantial reform has been lacking is in business taxation,” Mr Vaughan said.

“There have been improvements to both land tax and payroll tax in recent years and these are welcome, but more needs to be done, including rationalising smaller taxes and charges.

“The time has come to open South Australia for business and our State Budget Submission is a clear call for business taxation reform.”

Two independent reports released earlier this year from the Institute of Public Affairs and the Centre for Independent Studies both highlighted South Australia as having the most uncompetitive taxation system in the country.

“These calls for taxation reform are not new, however the issues created from the current taxation system are hurting the local economy,” Mr Vaughan added.

“Independent reports and feedback from local businesses tell us that these taxes remain as a major burden weighing down the economic performance of our State.

“It’s a very competitive environment out there and we are giving interstate businesses a significant advantage before we even get started.

“Our taxation levels are giving businesses every reason to leave the State and the greatest way to attract business is to provide a more competitive business environment.”

Land tax

“South Australia has the least competitive land tax regime in Australia.

“If we are serious about attracting investment and encouraging the growth of local businesses then we must address the tax rates and threshold levels.”

Payroll tax

“Payroll tax is a direct tax against employment and it impedes economic growth.

“Our unemployment rate is well above the national average and, in the absence of significant taxation reform at the national level, an increase in the payroll tax threshold is critical.”

Henry taxation review

“The Federal Government’s response to the Henry Tax Review was underwhelming and should only be the beginning of comprehensive tax reform. The State Government should push for a more universal response and encourage national tax reform.”

“It is easy to say that tax relief cannot be provided in the current economic climate, but the flow-on effects will be of major benefit to the rest of the economy,” Mr Vaughan said.

Adelaide Office

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136 Greenhill Road Unley
South Australia 5061

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