Payroll tax relief to come to an end

A reprieve for Western Australian businesses paying payroll tax will come to an end in June as part of moves by the state government to bring the budget back into good financial shape.

Premier Colin Barnett told reporters this morning the payroll tax concession implemented for small to medium-sized businesses last year will not continue.

"We were the only state government in Australia that gave a major tax concession during the financial crisis and to have allowed thousands of small businesses not to be paying payroll tax for 12 months was at a cost to treasury of $100 million," Mr Barnett said.

"It played an important role in keeping those businesses not only viable but making sure they maintained employment and particularly maintained employment of apprentices and other staff in traineeship programs.

"That's been effective and we took that decision to have no payroll tax for small to medium business for 12 months, normal rates of payroll tax will resume as of 1st of July."

The removal of the concession has angered business lobby group, Chamber of Commerce and Industry WA, which wants the payroll tax abolished.

CCIWA chief executive James Pearson said that regular surveys with the group's members show that payroll tax is one of the costs of business that owners most resent.

"The WA business community knows the payroll tax is a tax on jobs, it acts as a disincentive for small firms to hire more people in order to grow," he said.

"At a time when many businesses are doing it tough but at the same time there are increasingly good prospects for our economy, we should be helping small businesses to grow, we should be bringing in payroll tax relief permanently."

Mr Pearson added that WA is the highest taxing state on a per capita basis with other states holding lower rates of payroll tax.

Small businesses will not be the only ones slugged with higher costs with Mr Barnett today indicating that water bills and other charges will increase.

Western Australians are already facing higher electricity and gas bills, with power bills to increase a further 18 per cent next financial year.

Mr Barnett said today that the increases were in order to pay for the "real" cost of the service.

"We're making correct decisions to get the finances of this state into a good shape," he said.

State shadow treasurer Ben Wyatt said the increases were to help bail out the government's excessive spending.

He said despite the economic downturn, the most recent financial projections contained in the Mid Year Review show Government revenue for 2010-11 is in excess of $21 billion.

"Never before has Western Australia received so much revenue," Mr Wyatt said.

"We now know that with the improving economy and the recent BHP iron ore deal with Asian steelmakers actual revenue for 2010-11 is likely to be significantly higher than forecast in the Mid Year Review.

"However, despite this enormous flow of money into the State's coffers, families will have to pay for the Barnett Government's mismanagement of the State's finances.

"Not only is Colin Barnett taxing Western Australian households at record levels, he has imposed a $511million tax increase on small businesses and is now looking to increase taxes on the mining sector to cover his ever growing fiscal hole."