No wonder TSBE is mad – Toowoomba businesses missing out on generous payroll tax discounts

Toowoomba & Surat Basin Enterprise, a chamber of commerce, has been annoyed by the Queensland Government’s decision to exclude Toowoomba from its 1% regional payroll tax discount, announced in the 2019-20 state budget. A recent email from TSBE, directing its contacts to its Payroll Tax Regional Discount Survey, announced:

TSBE believes that Toowoomba deserves the same discount in payroll tax that other regional areas will receive. We have the same challenges that other regional areas have in doing business including attracting staff, paying increased energy costs and internet connectivity and we believe that in this instance the Queensland Government is not applying public policy equitably and fairly across the regions.

The exclusion is a big deal for Toowoomba businesses, because its means the difference between a payroll tax rate of say 4.75% or a discounted 3.75% (for payroll up to
$6.5 million and over the $1.3 million threshold). This mean a business with a $5 million payroll would pay $37,000 less in payroll tax per year if it received the discount. Toowoomba businesses will be annoyed their competitors in other parts of regional Queensland, including in Townsville, Wide Bay, Cairns and the Outback, will receive the discount.

Toowoomba residents must be confused about whether they are considered part of regional Queensland or not. There do not appear to be any consistent definitions of South East Queensland or regional Queensland. Indeed, the Queensland Government is inconsistent in its classification of Toowoomba. For example, although Toowoomba has been excluded from regional Queensland in defining eligibility for the payroll tax discount, it was considered regional enough to be eligible for funding from the Regional Capital Fund in 2016:

Building our Regions: Current Fund Areas

Also, it appears Toowoomba is considered part of regional Queensland, and not as part of SEQ, in determining retail trading hours:

Allowable trading hours – Easter period and ANZAC Day 2019

For the record, I’m not necessarily supportive of regional tax discounts. I’d rather governments avoid complexity in the tax system and work on lowering rates in general, for all businesses across Queensland.

Toowoomba Railway Station

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6 Responses to No wonder TSBE is mad – Toowoomba businesses missing out on generous payroll tax discounts

  1. Russell says:

    Gene, I have always thought that payroll tax is simply a negative incentive to employing people. I know states need to raise income, this current government more than most, but why do it in a way that hampers employment? As much a I would dislike the idea it would be more positive to have say a state levy of say 1% on income tax instead of payroll tax. At least people would be employed first.

    • Gene Tunny says:

      Thanks for the comment Russell. Yes, payroll tax can have an adverse impact on employment and wages. Regarding a state levy on income tax, I was supportive of Turnbull’s idea to give states and territories a specific share of income tax, which I think would be similar to what you’re suggesting.

  2. colinfruk says:

    Not to be “that guy” Gene, but TSBE is an economic development group not a chamber of commerce. TSBE, Advance Cairns, Townsville Enterprise and other such groups partner with regional councils to secure external investment in commercial and infrastructure projects. Chambers of commerce exist as politically independent advocates for people who own and run their own business, particularly small and medium employers. Chambers of commerce are more representative of all businesses in a region, whereas groups like TSBE are weighted towards larger players. The two organsations are often conflated since their priorities are regularly aligned.

  3. Glen says:

    Gene, in my opinion if you are within 2- 3 hours drive of a capital city you are not a regional city, but a satellite city and the govt could do well to differentiate between the two. If a person can drive to the capital for a specialist appointment for example and return the same day then they are not in any way inconvenienced, this is a completely different scenario for people in regional cities who don’t have access to that type of services. Where Toowoomba should feel some grievances is as you pointed out in the retail laws that exclude them from offering the same services as Brisbane, I believe this does discriminate against Toowoomba and should be addressed.

    I also agree with your overall observation that offering tax concessions to particular geographies is not good policy, and is just tokenism, there are many other more beneficial things the govt could be doing to stimulate regional economies.

    • Gene Tunny says:

      Thanks Glen. Good comments. I like the way you identify cities which are truly regional. Depending on traffic, you can drive to Toowoomba in just over 90 minutes from Brisbane’s inner western suburbs.

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