The Australian Retailers Association has welcomed measures to support families and small businesses in the just-tabled Victorian Budget, but warned that mounting taxes and levies on large retailers may have an economic ripple that impacts all Australians.
According to the ARA, budget measures of most interest to retailers include the COVID Debt Levy Payroll continuing until 2033, which will charge businesses with turnover above $10 million an additional 0.5 per cent payroll tax and businesses with turnover above $100 million an additional 1 per cent payroll tax.
Other key measures include the previously announced increase of the payroll tax-free threshold for small businesses will begin this year, increasing from $700,000 to $900,000, with a confirmation the payroll tax-free threshold will be phased out for larger businesses, as announced last year.
ARA CEO Paul Zahra said the new Budget is a mixed bag for retailers economically.
“The consumer spending slowdown, coupled with increased costs of doing business, is pushing many retailers to crisis point,” Zahra said. “We welcome the measures that will alleviate costs and provide some cost-of-living relief.”
“However, unfortunately several of the changes announced in this year’s budget will only exacerbate the challenges for retailers.”
Zahra said he was pleased the Government will retain the increase to the payroll tax-free threshold to $900,000 for small businesses.
“This is especially valuable for new small businesses, to have a wider net of tax relief while they’re first getting off the ground,” Zahra said.
“We’re also pleased to see business insurance duty will be phased out over the next decade, reducing costs by more than $500 million in the first four years.
“Whilst the replacement of commercial stamp duty will save retailers in the short term, unfortunately over the long term it will prove much more costly.
“In addition, the COVID Debt Repayment Plan and phasing out of the tax-free threshold for larger businesses will put a significant handbrake on growth and could potentially result in increased prices or reduced staff.”
Zahra said the Sick Pay Guarantee, which will be phased out over the next 10 years, was a welcome initiative for workers who were unwell during the pandemic.
“Moving forward, it makes sense to retire the Sick Pay Guarantee program considering casuals already receive a loading paid by employers to cover sick leave and holiday pay,” he said.
Overall, Zahra said the Budget ultimately could have delivered far more to address current economic challenges.
“It is disappointing that the Budget has done little to relieve the cost of doing business crunch and improve consumer confidence – this is something the retail industry was desperate to see.”
Meanwhile, the Victorian Chamber of Commerce and Industry called it a “no frills” Budget as it welcomed no new taxes on business.
The Budget also pledges responsible government spending on programs and infrastructure while addressing the State’s debt trajectory. This indicates the Government plans to live within its means, according to VCCI.
“We are pleased that there is no major hit for business in this Budget, while three taxes and charges that stifle business growth will reduce from July 1, 2024,” VCCI CEO Paul Guerra said.
“There is also strong recognition of our push to ensure business has access to a strong workforce pipeline through commitments for TAFE and training, careers counselling and skills, particularly in emerging industries.
“It is pleasing that the Government has committed to reigning in spending and has a plan to address our State’s ballooning debt and a path to achieve an operating surplus. It is imperative that Government is disciplined and focused on staying this course because the State’s substantial debt remains of concern.”
Guerra added that members of VCCI need certainty that they can operate in an environment where their costs do not outstrip their profits.
“We want Victoria to return to being the best state to operate and do business; the best way to do that is to restore confidence,” Guerra said.
“The next phase must be growth coupled with genuine economic reform: the State must unlock sources of income from our innovation sector and natural resources and up the ante on energy generation to transform our future.”