Excessive WA tax take warrants urgent tax relief, says CCI

WA's peak body representing business - the Chamber of Commerce and Industry of WA - says the State Government is holding out on long-overdue tax relief in spite of grossly excessive revenue flows.

The Treasurer is expected to announce final financial results for 2005-06 this week showing a WA budget surplus heading for $2,500 million. If confirmed, this will be seven times that expected for Victoria this year and 25 times the $91 million surplus forecast on Friday for South Australia.

According to CCI, the WA situation is made worse by the fact our surplus would have been greater still but for runaway over-spending by the Government through lack of a disciplined budgetary process.

The Chamber today released its response to an interim report on the State Tax Review being conducted for the Government by the Department of Treasury and Finance.

CCI said the Tax Review report was disappointing. It said the report lacked vision and intent and did not demonstrate any commitment to reform.

CCI chief executive John Langoulant said the report did not reflect the strong views about the need for tax relief that were conveyed to the Tax Review by the reference group of business organisations and stakeholders.

"Our scepticism about this review is being borne out," Mr Langoulant said. "It is giving the Government an excuse to do nothing about taxes until the next election is in sight, which is exactly what we feared."

"However, the Government has such an embarrassment of riches this year, as a result its high tax levels at a time of spectacular economic growth, that I don't think it will be able to get away with that without attracting some adverse electoral odium."

"Everyone, including the Government, knows what the big issues are - they are payroll tax and the stamp duties on property and cars - and the announcement of this huge surplus needs to be followed pretty quickly by some meaningful taxation relief."

CCI's response to the interim Tax Review report said the Treasury report had not promoted the case for fundamental reform and indicated no commitment to change in the priority tax areas identified by the Review reference group.

CCI said it was clear the costs of the various reform options discussed had shaped the report's findings, despite the Government's assertion the review would not be constrained by an objective of revenue neutrality.

The Chamber's response was particularly critical of the deterioration in Western Australia's interstate tax competitiveness.

It said that even using the kindest measure - that which is used by the Government - its tax take as a percentage of Gross State Product had increased by more than 15 per cent, when the average of the other states over the same period had fallen 3 per cent.

Measuring it on a per capita basis, WA is the highest taxing state in Australia.

"It is at times of strong economic growth and secure government finances that tax reform is best undertaken, not when things are tight," Mr Langoulant said.

"Now is the time for the Government to act", he said, "and we would be very disappointed if it was to take a cynical political approach in these circumstances and continue to hold out on much warranted taxation relief to the community."

An announcement from Deputy Opposition Leader Troy Buswell is pasted below

The Carpenter Government's estimated $2.5 billion budget surplus for the past financial year highlights a missed opportunity to provide meaningful long-term tax relief to Western Australians.

Shadow Treasurer Troy Buswell said record tax revenue, generated by record levels of economic growth, had provided the Carpenter Government with a once-in-a-generational opportunity to cut tax, but it had failed to act.

"It is a disgrace to think that with record economic growth and Government coffers flush with money, Western Australia remains Australia's highest taxing State," Mr Buswell said.

"Western Australians have every reason to ask why, in this time of record growth, we are paying $800 more per person in State taxes than Queenslanders.

"The Treasurer's agenda is to keep ratcheting up State taxes until it becomes politically attractive for him to offer tax cuts.

"Eric Ripper and the Carpenter Government are mismanaging the good times.

"The Government should be using these economic good times to position Western Australia to grow into the next decade of the 21st century.

"Unfortunately, Eric Ripper's legacy will be one of missed opportunity, a burgeoning public sector and Western Australians paying more in tax than other Australian residents."