Making taxes work for business

LAST year’s Business Tax Review gave many business stakeholders an opportunity to have input into State tax reforms. One of the review committee’s recommendations concerned the need for an ongoing tax committee focused on business.

Jackson McDonald tax partner Jonathan Ilberry said the committee could focus on making taxes work for the State and, in turn, make the State more competitive.

“[The committee could focus on] being more innovative in relation to tax, rather than just been seen to stifle business … trying to get it to encourage business into WA,” he said.

While supporting reform, most panelists agreed that State taxes were a ‘dead hand’ on business and recent increases should be wound back as soon as additional revenue from GST filtered through from the Federal Government in 2007-08.

Jonathan Ilberry, Jackson McDonald tax partner: “It’s always a difficult process, tax reform. I hark back to a statement I made at the first [Business Tax Review] committee meeting last year where I was reminded what Roger Douglas, a New Zealand minister for finance, said when he was involved in the first tax debates in Australia. 

“Walking away from the first meeting he said that: ‘It’s like an exercise of death reform, everybody wants to go to heaven but no-one wants to die’. That’s what tax reform is all about.”

Peter Fitzpatrick, Motor Trade Association executive director: “I am an advocate of tax reform. At a macro level I think GST hasn’t delivered the benefits we thought it was going to deliver.  There is no doubt that some States have fared better than others in the GST system. 

“The dead hand of State taxes is having a real impact on our competitiveness and for a lot of people, predominantly small business, it makes the difference between them surviving or not surviving. I have genuine concerns that areas like stamp duty and payroll tax are now relied upon as a third of our State taxes.”

Eric Ripper, Treasurer: “What we have tried to do in the business tax review is to eliminate those circumstances where WA has been quite out of the market in terms of competitiveness in particular matters and tried to harmonise our arrangements with other States.

“We are the third highest taxing State or as the treasury briefing notes used to say when I came into power the fourth lowest. We’ve got $1790 per capita, Victoria has $1928 and New South Wales has $2109. 

“I think we had a really good exercise in the business tax review. I was really impressed by the way people took a broad view and despite the fact we had a broadly revenue neutral condition we got a pretty substantial package of reforms.

“We’ve had a good exercise here, not withstanding the comment we could have been bolder, and I think we have, despite the level of taxation, got a system that will involve less compliance costs for business and less administration costs for the office of State revenue.”

Gavan Forster, Master Builders Association director: “The thing that the builders are really concerned about is the pressure points, where they see the equity as not being there, which is obviously the stamp duty increases. 

“We are particularly interested to see whether the State Government is going to put in a submission to the productivity commission housing affordability inquiry because the argument is that the industry and home buyers are bearing an inequitable and disproportionate share of the tax increases.”

Scott Grimley, Ernst & Young principal: “The premise behind the abolition of various taxes and charges introduced under the GST was to be funded by increasing GST revenues. The comment I could make during the review process was that they were bringing forward the changes, and were funding that by the increase in the conveyancing base.

“There was no clear indication that would be unwound as GST revenues came forward”

Jonathan Ilberry, Jackson McDonald tax partner: “A number of the taxes that were abolished were planned to be abolished in four or five years time. What the Government sought to do was to make Western Australia more competitive by bringing those reforms forward. This was on the basis that, when the GST revenue comes in, which was when the reform was supposed to be funded, instead of being funded from that it is being funded by increases in other taxes. These have to be rolled back to get the balance back.”

Rami Brass, RSM Bird Cameron tax partner: “We do find these types of costs are a burden on small business, the administration a burden and sometimes, without trying to be too offensive, the draconian attitude of the officers from State revenue, they can be quite tough.  And when you try and reason with them and talk about law and case law you always get the response back ‘that’s policy’ or ‘go back and object or appeal’. 

“For small business that is not an option, they cannot afford it.”

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