Premier Geoff Gallop has defended his decision to boost taxes during his first term by claiming that subsequent tax cuts more than offset those increases.
And he has highlighted a Northern Territory Treasury study, which he said showed Western Australia imposed the lowest taxes on business of any state in the Commonwealth.
He made both claims during an address to a WA Business News Success & Leadership breakfast last week.
He said WA had witnessed a spectacular growth rate of 6 per cent over the three years to 2004, well above the national economy’s 3.6 per cent level.
“In the same period investment in Western Australia grew by 65 per cent, double the national figure,” Dr Gallop said.
He was addressing a 450-strong group of business leaders, academics and senior private sector employees.
“We’ve got a low unemployment rate – and also high participation rates,” Dr Gallop said.
“Our exports account for almost 30 per cent of the nation’s merchandise exports in value terms.
“Some figures I like to use – just under 10 per cent of the population and 30 per cent of the merchandise exports.”
But it was his government’s taxation outcomes that he most strongly emphasised, because Treasury is currently under pressure because of calculations made by the Chamber of Commerce and Industry (CCI) which show the Gallop Government made WA the highest taxing jurisdiction in 2003-04.
Dr Gallop claimed before the 2001 election that he would not boost taxes and a Labor policy paper undertook to ensure that his government’s taxation levels would not make businesses uncompetitive.
But CCI researchers showed that after excluding gambling taxes, which do not directly impact on businesses, WA in 2003-04 was the highest business sector taxing state in per capita terms.
The CCI also scoffed at the latest state budget, which stopped comparing WA to other states by the per capita method, opting instead for a method that emphasised WA’s gross state product, which made Labor taxing policies more palatable.
“Now, there’s lots of argument about how you measure these [taxes] things,” Dr Gallop said.
“We’ve got the use of taxation as a percentage of gross state product, a measure that is actually used when we compare nations. And it can also be used to compare states.
“We’ve got taxation levels in per capita terms.
“I’ve been saying to my government people; ‘look, what we really want to know is what it means to be a business here in WA’.
“Now, every business is different. There are smaller and larger businesses.
“There are some that have a higher need for energy than others; some rely more on labour rather than technology; they are all differences.
“But in as much as we can look at businesses, I think we need to have a look at what the costs of doing business in WA, and how they compare with other states.
“Treasury has been doing an analysis into these matters – it’s a preliminary analysis at this point.
“But this analysis shows that the cost of doing business in this state in terms of our state taxes and utility charges is the third lowest of any state.
“Critically, our costs are substantially lower than NSW, moderately lower than Queensland’s and significantly lower than Victoria’s.
“Using the same analysis for a medium-sized business with 100 staff, the cost of doing business is the second lowest, behind Tasmania, which has the lowest.
“Now, the analysis shows that our lower taxes and the rental costs are more than offset by higher electricity and water charges relative to the other states.”
Dr Gallop said the Northern Territory’s treasury had produced an analysis that looked at a representative 50-staff and 100-staff business, and it showed that WA was the lowest taxing of all the states.
“Now I’m simply making the point here that we’ve got to have a sophisticated analysis of what the costs of doing business are and we’ve got to look at the other range of issues as well,” he said.
“But I want to make the point that this is an issue for the Government we took seriously in our first term, and we intended to take it seriously in our second.”