Vic Budget 2023-24 to hit jobs and investment

While the Victorian Chamber of Commerce and Industry welcomes stamp duty changes and payroll initiatives for small business, new and increased taxes and levies will hit medium to large businesses and directly impact jobs and investment in the State.

Business needs to be encouraged to grow and invest, as employment growth is forecast to be weaker over the next four years.

The State Budget 2023/24 is positive for small businesses that will benefit from paying less payroll tax and the abolition of insurance duties over the next 10 years. It is negative for medium businesses that will have a higher payroll tax bill, which only serves to discourage more jobs in Victoria. Big business with turnovers of more than $100 million once again face an even higher payroll tax and land tax rate.

Though the Budget provided funding for five of the Victorian Chamber’s top 10 recommendations in our Budget Submission, the additional taxes on medium to large businesses in particular will be difficult to absorb given they are already operating in a tough economic climate with increased costs in energy and supply chain.

Unfortunately, the negative outweighs the positive initiatives for medium and large businesses with a new COVID Debt Levy applying to businesses with national payrolls of more than $10m, removal of the tax-free threshold for businesses with payrolls of more than $5 million, as well as owners of more than one property – residential, industrial or commercial. This is in addition to the previously announced 42 per increase to WorkCover premiums.

Key initiatives

Positives in the 2023/24 Budget include:

• Progressive changes to phase out stamp duty and transition to an annual land tax for commercial and industrial properties, which the Victorian Chamber was instrumental in informing.
• An increase in the payroll tax-free threshold. From 1 July 2024, the payroll tax-free threshold will increase from $700,000 to $900,000, and further increase to $1 million from 1 July 2025.
• An Economic Growth Package for businesses including the reduction of business insurance duties over 10 years by 2033. These will be reduced by 1 percentage point each year from 1 July 2024.
• $34 million over four years from 2023-24 in regulatory reform to make Victoria an easier place to do business and further funding for the Business Acceleration Fund.
• $90 million over two years to Service Victoria to increase digital services.
• $12 million over two years from 2023-24 to support exporters to expand and strengthen their connection to international markets, including through the delivery of inbound and outbound trade missions.
• $32.5 million in 2023-24 for the rollout of the Victorian Masterbrand framework through Visit Victoria destination marketing activities and the development of an international tourism strategy and $23 million in 2024-25 to boost the Major Events Fund to attract the best creative and sporting events to Victoria.
• $15 million in 2023-24 to establish an Industry R&D Infrastructure Fund to incentive and leverage private industry investment in research and development.
• $170 million for 2023-24 to 2026-27 TAFE assets and infrastructure for five TAFE projects through the Building Better TAFE fund, and $143.7 million over two years from 2023-24 to 2024-25 for expanded free TAFE.
• $44.5 million over two years from 2022-23 to establish the State Electricity Commission (SEC) to accelerate investment in renewable energy in partnership with industry and $12 million over three years from 2023-24 to develop a business case for a SEC Centre of Training Excellence to provide training in the latest energy skills.