Bold Tax Reform Starts With Abolishing Payroll Tax

A note to young leaders.

I recently caught up with a thoughtful and talented member of the NSW Parliament.

He asked me whether I had any bold policy ideas that his party should consider.

Here’s what I told him:

“Payroll tax is a terrible tax at the best of times – but in the age of AI, it is nothing short of an abomination.”

Few social goods are greater than giving another human being the dignity, connection and self-sufficiency that a job provides. So why on earth would we tax it?

And yet, tax it we do.

In NSW, every business is required to pay 5.5% of its total wages bill including superannuation (above a fairly low threshold), in payroll tax.

We are, quite literally, taxing businesses for hiring people. That makes no sense.

We should be rewarding job creation, not penalising it.

The problem, of course, is that state governments have become addicted to the revenue. In NSW alone, payroll tax raises almost $13 billion per year.

It’s time to bite that bullet.

Lifting the GST rate from 10% to 15%, would allow us to abolish payroll taxes across all the states – while also protecting lower-income households through targeted tax relief.

For me, that’s a no-brainer – and the sooner, the better.

If we want a more vital economy and a more humane society, we should be doing everything in our power to encourage job creation.

Let’s start by abolishing payroll tax.