An Act that encourages new business start-ups and a boon for existing small and medium-sized businesses was passed in the Senate last night.

The Payroll Tax Rates Amendment Act 2005 will benefit businesses with payrolls in the $75,000 to $200,000 range.

In the existing structure, if a business has a payroll greater than $100,000, but less than $200,000, it pays 7.25 percent on the first $100,000 and then 9.25 percent on any portion above $100,000.

In the proposed new structure, the tax rate of 7.25 percent will apply to all payrolls under $200,000 except for those entities that are subject to the standard rate of 13.5 percent.

As all exempted companies are subject to the standard rate, the new tiered structure will not apply as the standard rate remains at 13.5 percent and the salary cap will remain at the existing level of $235,000.

PLP Senator, Raymond Tannock told the Senate that the Government was aware that some sectors of the economy are still in the recovery phase following the setback meted out by Hurricane Fabian. These sectors include farmers and fishermen, hotels, guest houses and restaurants and small businesses.

?Government wishes to make it clear that no increase in payroll taxi is proposed for any of these sectors,? he said.

The rate for churches and charitable organisations will also remain unchanged and the employee portion of the Payroll tax is being held at its existing rate of 4.75 percent.