State governments impose taxes on companies who employ staff in their state.

The rates vary slightly between each state but generally it’s 4 – 5% tax on top of each employee’s salary above a low threshold, capturing almost all small businesses and larger.

Victoria charges one of the highest rates in the entire country and uses draconian methods to collect the monies, even using tactics to enforce companies to be liable for other companies’ payroll taxes within a group of companies.

Only misguided politicians could think of such a tax to penalise companies employing Australians.

A lot of small businesses only operate on a 0 – 10% profit margin.

Paying 4 – 5% payroll tax on employees in many cases eliminates most of the minimal profits small businesses make.

Combined with the GST most companies incur and can’t pass on, it makes many businesses simply not viable.

Which leads to job losses.

It’s ironic; the unemployment rate is at a similar percentage to the payroll tax rate.

In fact because payroll tax is close to 5% it effectively means it costs 1 in 20 employed people a job, or 5% of the number of employed Australians.

That means if there was no payroll tax, with the money saved, businesses could employ one more person for every 20 employed.

If all the saved payroll tax went into employing extra staff, that would effectively, largely eliminate unemployment.

Many people don’t realise state governments made a promise… they agreed to eliminate payroll taxes, in return for a slice of GST revenues.

Then they lied and reneged on the deal, took the GST money but failed to reduce or eliminate payroll taxes, as promised to tax payers.

Penalising businesses to employ Australians is perhaps the dumbest tax in Australia.

Especially when Australian companies can now easily outsource work to overseas staff via sites such as www.elance.com and www.odesk.com where you can not only hire harder working employees for $3 – $10 an hour, but you pay zero payroll tax.

And you give someone a job who, not only deserves one, but is often higher skilled. In their country the payment is equal to a middleclass salary and enables them to live a life that, until recently, was only a dream.

State governments should be forced to deliver on the GST agreement and eliminate payroll taxes, starting with companies who employ less than 200 staff, which will help solve the high labour costs in Australia; one of our greatest economic threats.

These small to medium businesses employ 70% of Australians and can least afford to pay payroll tax.

I suggest businesses deliberately cap employing more Australians and consider outsourcing work overseas as a protest to state governments to deliver on their promises of payroll tax relief, or suffer the consequences of being the contributor to significant job losses in Australia.

I’ve personally capped the number of Australians I will employ in Australia, especially Victoria. In my companies I’ve approved up to 150 positions to employ oversee contractors, who don’t incur payroll tax and lower the cost of labour.

Some of these jobs would have gone to Australians but due to the greed of state government’s they won’t, and are unlikely to ever return.

In fact the next step for a lot of companies to be globally competitive now and into the future is to effectively cease operating from Australia altogether, or cut back to bare minimum staff here and grow their overseas operations.

Governments need to wake up to the fact we live in a globalised society. Payroll tax simply isn’t competitive. It’s nothing but a rort that only a bureaucrat who’s never earned a dollar in their life could dream up, to take from those who produce.

In my new book I’m about to release, 101 Ways to Improve Australia, I suggest that not only should payroll tax be eliminated, but state governments. They’re not necessary to effectively manage Australia.

(The UK has 60 million people and only two levels of government, whilst Australia has only 22 million people, yet 3 levels, costing significantly more for no extra benefit.)

Such a move would see a whole host of state taxes abolished. They simply wouldn’t be needed because costs of running state governments could be radically reduced without any effect on services (or some would say without any effect on the current lack of service).

If they hope to keep a long-term job in this country, employees in Australia should write to their state governments lobbying for payroll tax to be eliminated.

Jamie McIntyre is the founder of the 21st Century Group of companies and CEO of 21st Century Education. He is also bestselling author, successful entrepreneur, investor, sought after success coach, internationally renowned speaker and world-leading educator. www.jamiemcintyre.com

Jamie McIntyre is the founder of the 21st Century Group of companies and CEO of 21st Century Education. He is also bestselling author, successful entrepreneur, investor, sought after success coach, internationally renowned speaker and world-leading educator. http://www.jamiemcintyre.com

Author Bio: Jamie McIntyre is the founder of the 21st Century Group of companies and CEO of 21st Century Education. He is also bestselling author, successful entrepreneur, investor, sought after success coach, internationally renowned speaker and world-leading educator. www.jamiemcintyre.com

Category: Politics
Keywords: 21st Century Education, 21st Century Financial Education Summit, Australia, Government, Taxes, Jobs