Payroll tax and immigration

Press, Volume CXI, Issue 32540, 25 February 1971, Page 10

Payroll tax and immigration

The Minister of Immigration (Mr Marshall) should not be surprised by the lack of enthusiasm among employers for the scheme for subsidising immigrants. That prospective British migrants outnumber applications from New Zealand employers by 10 to one confirms the usual reluctance ’of employers to contribute to the cost of obtaining new workers from abroad. Most migrants intending to settle in New Zealand come here of their own accord and at their own expense. It has long been the policy of the Government to encourage more immigrants by assisted or subsidised passages; and the present policy virtually puts no limit on numbers. The taxpayers pay 75 per cent of the fares, the employer the rest. This division of cost is supposed to relate the benefit to the country as a whole to the benefit to the individual employer—a somewhat arbitrary apportionment.

Since the Government switched its emphasis, in 1968, from assisted passages to employersubsidised immigrants, the payroll tax on employers has been instituted—without, apparently, any consideration of its implications for immigration. One of the main purposes of the tax, according to Mr Muldoon, was to encourage employers to be more judicious in their use of labour. But the tax adds to the employer’s cost in recruiting labour from overseas. To allow the employer exemption from payroll tax for, perhaps, two years on wages paid to staff recruited overseas would not be inconsistent with the purpose of the payroll tax.

The net result would be that an employer’s saving in payroll tax would compensate him for the cost of adding a man to his own-—and the country’s—work force. It might also give the subsidy scheme the stimulus it obviously needs among employers who continue to protest about a labour shortage.