March 22, 2000 (Finance) 2000 Payroll Tax changes Finance Minister Lloyd Matthews announced today in his 2000 Budget Speech that effective April 1, 2000, the exemption threshold of the Health and Post Secondary Education Tax (HAPSET), commonly know as the payroll tax, will increase on an annual basis to $400,000. This means an annual tax savings to businesses in Newfoundland and Labrador of $6.3 million. From 1997 to 1999 government increased the exemption threshold from annual business payroll tax from $100,000 to $150,000. Today, the minister announced that effective April 1, 2000, the exemption threshold will increase by a further $250,000. In other words, all businesses which currently pay tax will benefit, and businesses with an annual payroll of $400,000 or less will not have to pay any payroll tax at all. "This move will reduce the number of businesses currently paying Health and Post Secondary Education Tax by a further 1,300, bringing the total number of businesses which have benefited to date to1,825," noted Minister Matthews. "This move is in keeping with government�s commitment to reduce taxes as it is fiscally responsible to do so, as well as reflecting many of the presentations made during the Jobs and Growth Consultations, the Tax Review Consultations and the Pre-Budget Consultations." Effective April 1, 2000, government will also equalize the payroll tax rate for the renewable resource sector from one to two per cent on an annual basis, in line with the general rate. The Advisory Council on the Economy and Technology (ACET) recommended both of these measures in its November 1999 report. The result of both payroll tax measures will be annual savings to businesses of $4.1 million. Media contact: Paula Dyke, Communications, (709) 729-0329. BACKGROUNDER Health and post-secondary
education (payroll) tax General Overview
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