THE state’s top business group says a report into state business tax regimes across the country has got it wrong when it comes to Western Australia.
THE state’s top business group says a report into state business tax regimes across the country has got it wrong when it comes to Western Australia.
The Chamber of Commerce and Industry WA insists the state has the highest tax regime in the country, disagreeing with the report by the Institute of Public Affairs, which put the tax liability on an “average” business in WA at $256,195 (the second lowest of all states and territories behind the NT).
The state opposition has seized on the report’s findings, claiming it as vindication for seven years of tax reform under Labor.
The report follows the state government’s decision late last year to introduce retrospective legislation to counter the effect of a High Court ruling on stamp duty.
The move follows a string of disputes between the state tax office and the business sector over the ‘land rich’ stamp duty provisions, which have substantially widened the tax net.
The IPA’s report labelled WA a “low taxing state, but (one that) needs to rein in its low-tax competition”, warning that states such as Victoria were working to cut their taxes and could pose a threat to WA’s low-tax status in the future.
WA’s real tax savings came from its low land tax, which was about $13,000 below the combined states’ average of $20,278.
Payroll tax and motor vehicle and insurance duties were all higher than the national average, showing there is further room for improvement.
CCIWA chief executive James Pearson has agreed with the report’s call for further tax reform, but disagreed that WA was the lowest taxing state.
Mr Pearson said CCIWA’s own analysis has found that WA was the highest taxing state on a per-capita basis.
The IPA report uses data based on the size of the state’s economy to produce its findings, however, producing a markedly different result.
The varying methods of measuring tax competitiveness were also on display in the state government’s mid-year budget review, which cited three ways of measuring WA’s tax burden on business.
Like the IPA, when measuring tax as a share of gross state product, WA came out well below the national average – 2.8 per cent of GSP compared to 4.3 per cent.
However, WA was well above the national average when measuring tax per capita, which the government said reflected the state’s strong economy.
Using a third measure, the state’s average tax rate was 7.4 per cent lower than the national average in the 2008-09 financial year, according to the Commonwealth Grants Commission.
The IPA report analysed the taxation burden to an “average” business, employing 60 staff and with assets of $16 million and annual profits of $5 million, and including payroll and land tax, as well as land transfer, insurance and motor vehicle duties.
Mr Pearson said high taxes on business were just another burden to growth in the state and called on the government to implement more tax reform.
“Business seeks immediate and meaningful tax relief to end WA’s reign as the nation’s highest taxing state,” he said.
“Payroll tax relief is a priority issue for WA’s business community.
“The government should cut the payroll tax rate and increase the exemption threshold to ease the burden on business.”
Opposition leader Eric Ripper has welcome the IPA report, which he said was proof of Labor’s tax reform legacy.
“Every single piece of Western Australian taxation legislation was modernised and rewritten in seven and a half years,” Mr Ripper said.
“Not only is Western Australia’s taxation regime now more competitive for business, but compliance and administration costs have been reduced through these processes.”
He called on the Barnett government to implement the last two pieces of Labor’s reform agenda – aligning WA’s provisions for grouping companies for payroll tax with the other states, and removing non-real property elements from the stamp duty base for business property transfers.
