Victoria already has some of the highest taxes in Australia, and payroll tax is one of the biggest burdens facing businesses, workers and employers. The Libertarian Party believes this tax punishes employment, discourages investment and increases the cost of living across the state. Under the current system, many Victorian employers are forced to pay a major state tax simply for hiring workers and growing their businesses. The Libertarian view is simple: taxing jobs is bad economic policy. According to the Libertarian Party’s Victorian taxation policy, payroll tax should be reduced until Victoria becomes the lowest per-person taxing state in Australia.
What Is Payroll Tax?
Payroll tax is a tax imposed on businesses once their taxable wages exceed a certain threshold amount during a financial year. In Victoria, businesses with a large enough wage bill must pay tax on employee wages, some superannuation contributions, fringe benefits and certain contractor payments.
The tax is administered through the State Revenue Office and applies to many businesses operating across Victoria. Employers must report their Victorian taxable wages, including some interstate wages, and comply with complicated rules under the Payroll Tax Act 2007.
Many business owners also deal with:
- changing monthly thresholds
- compliance paperwork
- payroll reporting obligations
- additional surcharges.
This creates extra costs before businesses even begin to grow.
Payroll Tax Hurts Jobs and Wages
The Libertarian Party argues that the payroll tax is effectively a tax on employment. When businesses are punished for hiring workers, the result is fewer jobs, slower wage growth and less investment.
Victoria’s payroll tax system affects:
- small businesses trying to expand
- medium-sized employers
- regional businesses
- family-owned companies
- start-ups.
It also affects workers. Businesses facing higher taxes have less money available for:
- wage increases
- hiring staff
- expanding operations
- improving workplace conditions.
This impacts Australian wages and increases pressure on the cost of living.
The Libertarian Party policy states that payroll taxes “are taxes on employment” and should be reduced to support wage growth and reduce the burden on Victorian businesses.
Victoria Is Becoming Less Competitive
High payroll taxes make Victoria less attractive compared with other states such as South Australia and the Northern Territory, where tax burdens can be lower for some businesses.
Many business groups have warned that Victoria’s tax system is damaging economic confidence. Employers already face rising:
- electricity costs
- insurance costs
- wages
- compliance costs
- land tax.
Adding more payroll taxes on top makes it harder to do business in Victoria. This particularly affects:
- hospitality
- retail
- manufacturing
- healthcare
For many businesses, payroll tax becomes a penalty for success.
The Mental Health and Wellbeing Surcharge
Victoria has also added the Mental health and wellbeing surcharge, increasing the burden on larger employers. Libertarians argue that government should fund core public services through general revenue rather than constantly creating new taxes and levies. Businesses are increasingly expected to fund every new government initiative through higher taxes, fees and surcharges.
The Libertarian Party believes this approach is unsustainable.
Regional Victoria Is Hit Hard by Payroll Tax
High payroll taxes are especially difficult for Regional Victorian employers, who often face:
- smaller customer bases
- transport costs
- labour shortages
- infrastructure challenges.
Regional businesses need lower taxes and more flexibility, not additional burdens.
Reducing payroll tax would encourage investment outside Melbourne and support regional economic growth.
The Libertarian Solution
The Libertarian Party wants Victoria to become the lowest-taxing state in Australia. This includes gradually phasing out harmful taxes such as the payroll tax.
The party’s policy proposes:
- reducing payroll tax
- lowering government spending
- cancelling wasteful projects
- encouraging private investment
- making Victoria more competitive.
The policy also argues that taxes such as payroll tax, stamp duty and the Emergency Services levy increase the cost of living and discourage economic activity.
To fund these reductions responsibly, the Libertarian Party proposes reducing government waste and cutting unnecessary spending rather than continually increasing taxes.
Lower Taxes Mean More Opportunity
Libertarians believe businesses create jobs, not governments. Lower payroll taxes would:
- encourage hiring
- support wage growth
- attract investment
- improve productivity
- strengthen the economy.
It would also make Victoria more attractive for entrepreneurs and employers who currently see the state as overtaxed and overregulated.
The party argues that Victoria cannot tax its way to prosperity. Instead, it needs a competitive economy where businesses can grow, workers can succeed, and families can keep more of what they earn.
Reducing payroll tax is not just about helping business owners. It is about helping every Victorian who wants better wages, more opportunities and a stronger economy.
Learn more about our policies for reducing your tax burden.