‘A kick in the guts’: Business owners rail against mental health levy

Business owners warn the $3 billion mental health levy set out in the Victorian budget on Thursday is a tax on employment and will hit those in the retail, hospitality and tourism sector hard.

The levy will be added as a surcharge on payroll tax for businesses paying more than $10 million in wages, and will double for businesses with wage bills of over $100 million.

Chris Lucas owner of the Chin Chin restaurant group said the levy was a kick in the guts. Credit:Arsineh Houspian

More than 9000 companies will have to pay the levy which the government said is less than 5 per cent of businesses.

Chris Lucas, owner of the Chin Chin restaurant group, said the hospitality sector would be particularly affected by the levy as its payroll costs were high.

“I think the government should be focused on stimulating the economy rather than taxing high employment sectors like ours who are already struggling after such a long and terrible lockdown,” he said.

“We are trying to rebuild our businesses and employ more people. I think sadly it means Victoria will lag the rest of the country when it comes to the post COVID era. It is a real kick in the guts.”

Mr Lucas said mental health services were a very important issue, but he did not agree with the way the government wanted to fund them.

“Our sector suffered as much if not more than anyone else when it came to the lockdown,” he said.

“We are being asked once again to carry the burden. What about the government looking at its own cost base like the public service wage bill?”

Gillian Franklin, owner of cosmetics business The Heat Group, also criticised the levy which she said was “a bad move”.

“We just try to keep taxing our way out of the problem but businesses are struggling as it is,” she said.

Harvey Norman founder Gerry Harvey said the levy only highlighted the problems with payroll tax which was a “dreadful, horrible, stupid tax” as it acted as a disincentive to employment.

“My biggest problem is that when they introduced the GST all those years ago, part of the deal was the payroll tax was supposed to be abolished,” he said.

“We are one of the few countries in the world where there is payroll tax. Payroll tax makes no sense, it is one of the worst taxes any government created.”

Business owners agreed mental health services needed to be well funded, but said an additional levy based on payroll was not the way to go about it.

“In every society you have lots of problems, mental health is one of many,” Mr Harvey said.

Adam Schwab, founder of tourism business Luxury Escapes, said funding for mental health was “100 per cent needed”.

“The need for mental health funding is extreme, linking it to payroll is strange,” he said.

“Do we want to encourage jobs growth or not? Maybe I would hire in NSW or in India if it is much more expensive to hire in Victoria. If you have to fire people and can’t hire them that hits mental health more.”

Craig Whatman, Melbourne partner at accounting firm Pitcher Partners, said the levy would impact many medium-sized businesses as well as large businesses.

“We do think it is unfortunate that there is another tax on employment at this time particularly coming out of the pandemic,” he said.

“The levy will particularly impact labour-intensive businesses particularly those in retail and hospitality who have been hit very hard by the lockdown.”

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