Business braces for tax hikes

WA business groups are bracing themselves for higher taxes when the Labor Govern-ment hands down its first budget on September 13.

Treasurer Eric Ripper confirmed “revenue measures” were necessary despite $850 million in operational cost savings being found to cover its election promises.

The spokesman said extra revenue was needed to cover surprises left by the former Government, but he said Mr Ripper was committed to maintaining WA’s competi-tiveness.

“They (tax increases) would be fair and target people who had the greatest capacity to pay,” the spokesman said.

Business wants the Government to rein in spending and maintain a balanced budget to protect the State’s AAA credit rating without raising taxes. It believes higher taxes will stall WA’s economic recovery.

Property circles are abuzz with rumours of raised stamp duty and other property taxes. Property taxes net the Government around $1.2 billion a year.

The $100 million redevelopment of the Midland Gate shopping centre is on hold until the Government makes its property tax position clear.

However, the Government has received some unexpected windfalls that will leave it with a $268 million surplus for 2000-01.

A note to Parliament from under treasurer John Langoulant said expenses were about $531 million higher than expected while revenues were $757 million higher.

Mr Langoulant’s note said the growth in expenses was widely spread across agencies and at least half would have effects in future years.

Chamber of Commerce and Industry chief economist Nicky Cusworth said that, after cuts had been made to spending on non-priority areas, the Government’s spending over the next four years would not be as high as $1.2 billion.

“They’ll have to bring in a very tight budget. I don’t think the Government’s job is an impossible one, but a difficult one,” she said.

“Government has said it will cut its costs by increasing efficiencies across Govern-ment and cutting down on non-essential things.

“The Government will have to reduce spending on low priority areas to fund its high priority spends. Some of the business assistance areas may be hit.

Chamber of Minerals and Energy economist Charles Crouch said WA’s business taxes were as high as they could be without causing economic harm.

“We would like to see the Government rein in its spending,” Mr Crouch said.

“Unfortunately the State’s tax base is very narrow and distortionary so there is little scope to raise taxes without causing harm.”

Property Council of Australia WA branch chief executive Joe Lenzo said the property industry most feared a hike in stamp duty.

“Some companies have been factoring in a stamp duty reduction for some time,” Mr Lenzo said.

“Any rise in this or any other property taxes will be an impediment to investment. Investment money is very mobile and raising these taxes will be an attack on WA’s competitiveness.

“Land tax could be another area hit. The Government could play around with the thresholds to help out small businesses but hit the bigger companies.”

Small Business Enterprise Association executive director Philip Achurch said the small business community wanted the Government to keep a budget surplus without raising taxes.

“We would like to see a payroll tax rate cut. Business is always looking at ways to reduce its overheads and payroll tax is a major one,” he said.

Mr Achurch said the idea of Government cutting business programs was not such a big issue as long as it kept those that were doing the most good.

He said the State’s AAA credit rating had to be kept.

“With a lower credit rating the cost of borrowings goes up, which is a problem for small business,” Mr Achurch said.

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