BUDGET 2013: Small business tax cuts revealed

"A step in the right direction but not far enough" is how the state's business community has responded to the government's payroll tax concession, a sweetener offered ahead of Thursday's budget.

Premier Jay Weatherill grouped with representatives from the major banks for the announcement on Tuesday, promising $21 million to give employers a payroll tax cut rate which could provide relief of up to almost $10,000.

The money, over two years, will provide a temporary payroll tax cut up to 2.45 percentage points for payrolls up to $1 million.

The tax is calculated on the amount of wages a business pays per month and is paid once a business exceeds the exemption threshold, which in SA is $600,000. 

But Business SA, the state's peak business body, says the fact the cut is only temporary means it does not go far enough.

Business SA policy director Rick Cairney said the organisation had pushed for a permanent cut on taxable incomes up to $800,000, up from the current $600,000, to help SA compete against other states with more attractive payroll tax concessions.

He stopped short of calling the premier's announcement it a 'quick fix'.

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"Bearing in mind this is also a cash grant at the end of each year, you've still got to pay the tax and then you get it back," Mr Cairney said.

"We welcome any tax cut and we requested payroll tax relief in this budget so we're pleased the government is finally listening but we'd encourage them to deliver further and lasting reforms.

"This is a step in the right direction ... We're still aiming to raise the threshold to $800,000 because if you look across the country, we have the second lowest threshold in front of Victoria. You can't forget that payroll tax is a tax on jobs."

Mr Weatherill, who once started his own small business, acknowledged their importance when delivering the announcement.

"I know what it's like to start and run a small business. That's why I wanted to assist small business in this, my first budget as Treasurer," Mr Weatherill said.

Payroll tax is an issue "across the board", in both metropolitan and regional areas, according to Mr Cairney.

"We understand the government is short on money but when we talk to our members, it's the cost of doing business that is their number one issue," he said.

Source: SA Government

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