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Government tax measure makes State competitive

WA is the lowest taxing State in Australia, or the fourth highest, depending on which measure is used.

If based on a percentage of Gross State Product then WA is the lowest taxing State in the land.

However, when considered on a per capita basis, WA is in the middle of the field when it comes to tax competitiveness.

Understandably, perhaps, the Department of Treasury and Finance believes the percentage of Gross State Product is the most accurate figure to use because it “reflects the capacity to pay tax”.

And the long-awaited review of business taxes is not likely to make any impact on WA’s tax competitiveness, given that its recommendations will have to be revenue neutral.

The Government raises more than 20 taxes, although four – stamp duty on property conveyancing, stamp duty on motor vehicle registrations, payroll tax and land tax – account for 75 per cent of its revenue take.

When all major taxes are considered WA is very much middle of the road and, therefore, more likely to get run over as businesses rush towards the more tax-competitive States.

And most business organisations, such as the Chamber of Commerce and Industry and the Property Council of Australia, believe that rush will be heading towards Queensland, which has very competitive tax arrangements in the four major tax areas.

In terms of stamp duty on property conveyancing WA is the most expensive at both the minimum and maximum ends of the tax take scale.

On land tax WA falls behind all other States bar New South Wales and Victoria. Again, Queensland is the most competitive.

The property sector has been complaining for several years that it is the highest taxed sector of WA’s economy.

WA remains the most expensive State in Australia to register a car worth more than $60,000.

For example, it would cost $3,900 to register the latest model MGTZ sports sedan in WA, $3,000 in Victoria, $1,200 in Queensland, $2,340 in South Australia and $2,400 in Tasmania.

However the Government has made some improvements to registration fees for heavy vehicles by reducing the stamp duty payable on their registration to 3 per cent capped at $12,000 for a new vehicle. The flat stamp duty rate also extends to the registration of trailers.

But this still falls short of what is on offer in Queensland, where truck registrations draw a 2.5 per cent stamp duty and trailers are duty free.

But in terms of compulsory third party insurance premiums, WA is the most competitive.

WA is about mid-range in terms of payroll tax (see table below).

According to the Chamber of Commerce and Industry the Australian Capital Territory is the least competitive and Queensland has the best payroll tax regime. WA comes third.

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