Parts of the business community are up in arms after the announcement of a payroll-based ‘mental health levy’ to be imposed in Victoria, according to State Treasurer Tim Pallas.

The levy, which Pallas claims will impact less than five per cent of employers across Australia and only the sections of their workforce working in Victoria, will take the form of a 0.5 per cent surcharge on payroll tax for businesses with wage bills exceeding $10 million, and adds on another 0.5 per cent for those above $100 million.

The levy is expected to drive around $3 billion into mental health services: an area of the economy that has become increasingly relied upon, and likely will continue to, as Australia continues into the next stage of the Covid-19 pandemic.

According to the treasurer, “there have been some big winners from the pandemic – it’s only fair they pay their share.”

“It’s about recognising that there is still, and there will be, enduring issues that will need to be dealt with as a consequence of the pandemic event; it requires us all to think about what sort of society we want.”

It’s hard to deny that parts of the retail industry have seen booming sales since the pandemic begun, even if other parts of the industry are still recovering and struggling.

The supermarket, homewares and furniture sectors have seen massive growth over the last year, though they are beginning to taper off as Aussies’ shopping patterns return to normal, while sectors such as travel and CBD retail have been hit hard.

However, according to Business Council Australia chief executive Jennifer Westacott, the very idea of a ‘mental health levy’ sets a dangerous precedent of fiscal repair which “ultimately harms growth”.

“While we welcome mental health reform which is much needed to deal with systemic issues and the devastating impact of a long and disproportionate lockdown, an approach that pits some Victorians against others by taxing jobs makes everyone a loser,” Westacott said.

“A high taxing budget simply makes it harder for Victorians to get ahead and for businesses to take the lead on new job creation.”

ARA boss Paul Zahra said that mental health has never been more important after the past 12 months, but that positive impacts in the budget for businesses could be undone by the levy.

“We question the net outcome on business,” said Zahra.