THE Opposition's call for a payroll tax cut of 15 per cent this year as part of a $1 billion plan to stop businesses shedding jobs was a "reckless, back-of-the-envelope" policy, the Premier, Nathan Rees, said.
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But it was bad timing for Mr Rees, whose comments came as his federal counterparts suggested there could soon be income tax cuts as part of a stimulus package to help the flagging economy.
Yesterday the Herald revealed that the Opposition Leader, Barry O'Farrell, was calling on the Government to cut its payroll tax rate from 5.75 per cent to 4.89 per cent in a one-off move designed to save thousands of jobs.
The Opposition Treasury spokesman, Mike Baird, said that if economic conditions persisted the coalition would adopt the policy upon winning government in 2011.
But Mr Rees said: "It is one of the more reckless back-of-the-envelope pieces of policy I've seen … It would be a loss of $1 billion in recurrent budget funding, guaranteeing a deficit for NSW, for something that doesn't benefit 92 per cent of businesses in NSW. It is a recipe for disaster."
Only 8 per cent of NSW businesses pay payroll tax because the threshold is a wages bill of $623,000 a year.
Mr O'Farrell hit back yesterday, saying: "You can't stand by and idly watch when business and families are crying out for help. We're saying we can assist business and families at this particular time."
The NSW Business Chamber's chief executive, Kevin MacDonald, said cuts to payroll tax would be a good start but a wider package of concrete measures to kick-start the NSW economy should be considered.
"We'd urge the State Government to consider fast-tracking the planned rollout of infrastructure," Mr MacDonald said.
He acknowledged the Government had plans to cut payroll tax to 5.5 per cent by 2011.
Mr Rees and the Treasurer, Eric Roozendaal, said the Government had cut developer levies and made a $3000 boost to the home owner grant for new constructions.