Member for Northern Tablelands Adam Marshall re-opened a long-running conversation this month, after introducing legislation to abolish payroll tax throughout regional NSW.

The idea behind the proposed law is two-fold, to grow local businesses without financial penalty, and attract businesses from further afield to open up shop in regional NSW. 

“Payroll tax is outdated and archaic, costing regional businesses millions of dollars each year,” Mr Marshall said. 

The bill would create a special economic zone covering all regional NSW, that is, everything outside of greater Sydney, Newcastle, and Wollongong. 

“Everything within that special economic zone would be exempt from paying payroll tax,” he said. 

“We are following the example of Victoria as regional Victoria has a different payroll tax rate to Melbourne, positively encouraging growth in the regions”

It’s not the first time NSW has explored helping regional NSW through discounted payroll tax.

In 2018, the NSW Government held an inquiry into ‘zonal taxation’, with its number one finding being that ‘a zonal tax approach in NSW is justified to support and encourage regional economic growth’.

Since then, the threshold for payroll tax has increased to $1.2 million, but falls short of the $2 million threshold recommended in the inquiry’s findings.

During the inquiry, the Walgett Shire Council made a submission in support of zonal taxation, for more than just payroll tax. 

Similarly, the Western Division of Councils NSW - including Brewarrina, Bourke, Cobar, Lachlan and Walgett - said in a submission that tax reform could offset the barriers of remoteness, higher start up costs and higher unemployment. 

“By introducing exemptions or concessions relating to Payroll Tax, Stamp Duty and Land Tax, the Walgett Shire Council believes it would attract new business to the area and encourage the growth of existing businesses,” then General Manager Don Ramsland said. 

In 2020, Member for Barwon Roy Butler advocated for payroll tax relief in the wake of drought and Covid-19. 

“Payroll tax is a handbrake on regional economic growth and regional employment. A zonal taxation system, on the other hand, would provide financial incentives for people and businesses to live, work and invest in regional NSW,” Mr Butler said at the time. 

Later that year, payroll tax concessions were handed down in the state budget, but were Covid-19 based rather than location.

Mr Marshall said in NSW Parliament last week that abolishing payroll tax in regional locations would ‘undoubtedly’ see businesses relocate from interstate.

“I’ve been talking to local businesses who are looking to expand, or who are feeling the bite from cost-of-living pressures, and who are enormously tired of government restrictions,” he said.

“I have long said that payroll tax is a huge burden on larger businesses, it is a terrible and punitive tax – it is a tax on employment in that the more employees you have the more tax you pay."