If the Liberals win Queensland’s state election in October – and polling indicates that they will – they’ve pledged to legislate a full payroll tax exemption on contractor GP wages.
GPs in Queensland could be completely exempted from payroll tax if Liberals win the state, but accounting experts say it’s unlikely to go down well with other health professions.
Queensland’s Liberal National Party first promised to eliminate GP payroll tax last year but formalised its pledge over the weekend.
The exact way it plans make that exemption is by passing an amendment to the Payroll Tax Act 1971 to make GPs a special category.
“What it comes down to is how they write the legislation,” William Buck business advisory director Paul Copeland told The Medical Republic.
“If they write it in such a way that [it says] ‘payroll tax does not apply to any payment made by a GP practice to a doctor or a practitioner working from that practice, where they qualify as a general practitioner’ then: yes, it should [work].”
Mr Copeland pointed to NSW, where practices that bulk bill a certain percentage of patients do not pay payroll tax on contractor GPs, as an example of a jurisdiction that has already passed profession-specific changes to payroll tax law.
Queensland Labor has publicly rubbished the proposal. Treasurer Cameron Dick was particularly critical, calling it an “unfunded promise” and “more nonsense” from the opposition.
In response, shadow treasurer David Janetzki said the projected $100 million per year in lost revenue from GP payroll tax would be made up for by the cancellation of a $24 billion hydro energy project.
This entire discussion is somewhat confusing given that Queensland has never seen any widespread collection of payroll tax from GP clinics; shortly after it became an issue, a statewide exemption was put in place.
“It’s [possible] that they’ve stacked it in as some sort of future revenue that they have then allocated budget and spending to,” Mr Copeland said.
There are two main risks to general practice associated with an exemption.
The first is that other professions are likely to want a piece of the pie.
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“If you’re a dentist or a medical specialist or an allied health practitioner, you’d be sitting there saying ‘why hasn’t my [professional] association asked for the same thing?’,” Mr Copeland said.
“Dentists are probably more similar in nature to the GPs than, say, medical specialists, just from the way that their operations work and the application of the payment tax provisions.
“It applies to allied health as well – if you’ve got a specialist psychology practice or other allied health practice, same issues are going to be there.
“If I was them and I didn’t get an exemption, I’d be cranky.”
The second is what the government might ask of general practice in return; after all, rarely have payroll tax concessions come without any strings attached, healthcare accountant David Dahm said.
“The cynic in me keeps thinking, ‘yeah, I’m sure they’ll give [the exemption] to you, but subject to handing over all your data or bulk billing or something else’,” he told TMR.
“[And that would be to] address the issue that [an exemption] is not going to save any money for patients.”
What exempting general practice from payroll tax will do is stop clinics from putting up prices when the amnesty period runs out – i.e. avoid a hypothetical price hike – rather than trigger clinics to lower their prices.
From the government perspective, this is what will likely be the toughest sell.
University of Queensland health economist Professor Luke Connelly told TMR that state governments were limited in how they could influence bulk billing rates.
“As an economist … if you want patients to receive the benefit of a change in tax arrangements … [the best way] would be to give the money to the patients,” he said.
“If you give the money to the patients, you can be sure the patients are going to [benefit] even if you don’t see any difference in the price.
“But that would require a state to start subsidising Medicare services, which would expose it to whatever growth happens in those services.”
For now, both the RACGP and AMA Queensland have backed the LNP’s promise to nix the tax.
AMAQ immediate past president Dr Maria Boulton, meanwhile, said it was “immoral” for the state to impose a tax on healthcare.
She argued that Queensland’s detailed public ruling on GPs and payroll tax “adds administrative burdens to … practices” and that it was expensive to restructure clinic payment flows.
Immediate past RACGP Queensland chair Dr Bruce Willett, who helped secure the state’s detailed payroll tax ruling, said the LNP’s pledge was “an important step to keeping essential healthcare affordable”.
