Andrew Barr hits out at doctor lobby groups over Canberra GP payroll tax debate

General medical practices in Canberra paying more than $2 million a year on wages will be required to pay payroll tax in a move doctors claim could result in a $20 increase in appointments.

But general practices will be exempt from paying the tax in the ACT if 65 per cent of all services are bulk billed.

The Royal Australian College of General Practitioners and the Australian Medical Association are highly critical of this move and have described the move to link bulk billing rates to payroll tax as an "insult" and it is not viable to bulk bill that many patients in the territory.

The groups have warned some general practices could be forced to close if they are forced to pay the tax.

Mr Barr slammed the campaign from doctors in the Legislative Assembly on Tuesday, saying there was no basis on which payroll tax would be the reason a general practice would close in the territory.

The Chief Minister told the Assembly it was not unreasonable to expect general practices to bulk bill 65 per cent of services.

"It has been done. It is done every month, everywhere in the nation except here," Mr Barr said.

"Lobby groups who seek to minimise tax will make all sorts of wild accusations.

"This debate has been full of that and has been based on a fundamental misunderstanding about how the tax is applied and how it is collected but it has also been based on frankly a lack of ambition in relation to bulk billing, an ambition that is achieved everywhere else."

Mr Barr also criticised claims the tax would result in a $20 fee increase saying this was based on calculations that payroll tax would be implemented on the first $2 million of wages. The tax is only paid on the wages above $2 million.

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In response to Mr Barr's comments, Royal Australian College of General Practitioners Nicole Higgins said the government's decision could "definitely be the determining factor" in closing general practices.

"The ACT does have the highest payroll tax free threshold in the nation; however, it is also the case that Canberra is one of the most expensive places to run a practice anywhere in Australia, and we know that some ACT practices have already been forced to close because they simply can't afford to keep the lights on," she said.

Australian Medical Association ACT president Walter Abhayaratna said there was no lack of ambition from general practices to achieve bulk billing. He urged the government to offer a proper exemption and to have a dialogue with stakeholders before acting in regards to payroll tax.

"Why can't we pause and actually do some proper engagement with relevant stakeholders where we do some proper modelling and testing assumptions on both sides which are so disparate," he said.

General practices have not been required to pay payroll tax as the doctors who worked there were considered to be contractors and their wages were not included as part of the overall business.

But this changed after the NSW Supreme Court ruled general practitioners were subject to payroll tax. Groups have been lobbying state and territory governments to exempt general practices from paying the tax.

The tax was supposed to be applied retrospectively but the ACT government will not chase any taxes from before June 30 2023.

Mr Barr was asked in question time whether he had any meetings with the Royal Australian College of General Practitioners or the Australia Medical Association about the tax.

"[I] was very clear the government would not simply waive payroll tax obligations without anything in return that our objective was to drive up the rate of bulk billing, which was acknowledged to be significantly lower in the ACT than elsewhere," he said.

"I understand that lobby groups will seek to minimise their tax and minimise the tax of their members but my responsibility as Treasurer is to protect the integrity of the territorial tax system and if there is to be any special exemption provided for any particular industry sector than the community must get a dividend."

Mr Barr said during the first half of 2022 bulking rates on all services were above 65 per cent in the ACT. This takes into consideration all appointments but only 5.5 per cent of clinics in the ACT bulk bill all patients.

Opposition leader Elizabeth Lee introduced a bill on Tuesday afternoon to completely exempt general practices from paying the tax.

"We know that Canberra is going through a cost of living crisis and this move by Andrew Barr and his Labor-Greens colleagues will make it absolutely unviable for GP clinics to continue to deliver the top quality services that Canberrans should expect from health care," she said.

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