Western Australia’s business community says a pledge by Troy Buswell at this morning’s debate with Ben Wyatt to increase the payroll tax threshold by $100,000 does not go far enough to ease pressure on companies. (Click through to watch the full debate).
Western Australia’s business community says a pledge by Troy Buswell at this morning’s debate with Ben Wyatt to increase the payroll tax threshold by $100,000 does not go far enough to ease pressure on companies.
Mr Buswell said at the WA Business News-hosted debate that a freshly-elected Liberal government would lift the payroll tax threshold from its current level of $750,000 to $800,000 in 2014-15, and then to $850,000 from 2016-17.
He said the first move would shave about $30 million from the annual state budget. The revenue hit would be $60 million per year after the threshold was raised for a second time.
The pledge comes a day after Labor ruled out payroll tax reform, drawing the ire of the state's Chamber of Commerce and Industry, which described the decision as hugely disappointing.
Small businesses have pushed for the threshold to be doubled to $1.5 million, arguing the payroll tax is a sizeable impost that stops them hiring more staff.
Mr Buswell said such a move would cost the state government $1.2 billion over a four-year term, which was not affordable given the state's rising debt.
Some would be disappointed with the Liberal plan, but it was better than Labor's position, he said.
"I think it's an important first step ... and is stark contrast to Mark McGowan and Labor, who claim to understand the pressure payroll tax puts business under but do nothing to address it," he said.
The state could also not afford to lift the threshold sooner.
"The timing, I think, reflects the fiscal challenges that we face and indeed how tight things are in terms of managing competing interests," he said.
"We have to strike a sensible balance."
CCIWA chief economist John Nicolaou said it was pleasing the Liberals recognised payroll tax was a significant issue for businesses, but Tuesday's pledge would allow a company to hire only one extra staff member.
Over a three-year roll-out, the benefit would be wiped out by wages growth, Mr Nicolaou said.
Mr Wyatt said Labor hadn't matched the commitment because of high debt and ongoing demands for new infrastructure.
"To debt-fund a tax cut at this point would be an irresponsible thing to do," he said.
Mr Wyatt would not commit to reintroducing a cap on state debt if Labor won the March 9 poll, with the incumbent Liberals projected to exceed the previously hallowed $20 billion ceiling on borrowings.
He was "favourable" to the idea, though.
A Labor government would need to get debt under control before paying it off, Mr Wyatt said.
Western Australia has become increasingly reliant on payroll tax as its share of GST diminishes, with the tax take rising from nine per cent of the state's operating revenue to 13 per cent in the past ten years.
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