Payroll tax cuts planned by the Canberra Liberals would cost the territory budget closer to $100 million over four years, well below ACT Labor's estimate of a near half-a-billion-dollar cost, the opposition says.
But the opposition has still not submitted the policy for independent costing by ACT Treasury, indicating only it would request costings by Friday to ensure the assessments were completed by the October 19 election day.
And Labor has warned the cuts would still cost more once wage growth over the next four years was factored in to the calculations.
The Liberals on Saturday said they wanted to cut the payroll tax rate by 20 per cent for wages up to $5 million paid each year in the ACT, dropping the tax rate from 6.85 per cent to 5.45 per cent.
ACT Labor on Saturday said the Liberal's policy would primarily support large businesses and multinational companies and would cost the ACT budget about $500 million over four years.
But the Liberals on Monday clarified their plan would not cut payroll taxes for businesses paying more than $5 million in wages a year. Those businesses would still pay 6.85 per cent on their total payrolls.
In 2022-23, 604 businesses in the ACT paid payroll taxes on a total wage bill between $2 million and $5 million, figures provided to the Legislative Assembly showed. Businesses with a payroll under $2 million do not pay the tax.
The average payroll for those entities was $3.17 million, meaning a payroll tax cut of 6.85 per cent to 5.45 per cent would save them about $44,400.
The total tax saved by those businesses amounts to more than $26.8 million a year, meaning the government would forego about $107.5 million in revenue over four years.
Opposition Leader Elizabeth Lee said it was laughable for Chief Minister Andrew Barr to lecture anyone on economic management given his failure to deliver budget surpluses.
"I'm giving Andrew Barr the opportunity now to correct the record before he has to pathetically, embarrassingly withdraw his comments once again in relation to having a go at the costings," Ms Lee said.
Labor on Saturday said the Liberals' commitments - including a cap on household and commercial rates, and payroll tax cuts - would amount to nearly $1 billion in foregone revenue over the next term of government.
Mr Barr on Monday stood by Labor's calculations, renewed his call for the Liberals to submit their policies for independent costing and said the Liberals had changed their policy.
"Their policy said they would reduce tax on businesses by reducing the payroll tax rate from 6.85 [per cent] to 5.45 [per cent] for wages up to $5 million, so effectively putting in place a new tax bracket and a tax rate for wages between $2 million and $5 million," he told ABC radio.
"That's the statement that's in their media release and in their policy document. You can do some pretty quick maths on what the difference between tax at 6.85 [per cent] on that $3 million of payroll between $2 million and $5 million, and then tax at 5.45 per cent."
A Labor spokeswoman said the cost over four years would also be higher as wage growth was factored in and the policy built in a disincentive to the tax system.
"The equivalent would be if once an individuals income went up in to a new tax bracket the higher rate applied to all of their income," the spokeswoman said.
"Not creating a new tax bracket reduces the cost, but creates a significant distortion in the payroll tax system where, for example, a payroll of $5,000,001 will attract a higher tax rate on the total amount above the $2 million threshold."
The Liberals' policy document, published online on Saturday, had said: "The Canberra Liberals will reduce tax on business by reducing the payroll tax from 6.85 per cent to 5.45 per cent for wages up to $5 million. This tax reform will benefit around 500 small businesses currently paying payroll tax, and encourage local businesses to grow beyond the current $2 million threshold."
The party's media release on Saturday did not include the detail about the policy benefiting around 500 small businesses.
