A POLITICAL stand-off over payroll tax changes threatens to derail the State Government’s planned business tax reforms.
The reform package, developed after extensive business consultation, includes a wide range of measures designed to simplify the State tax system.
However, the entire package could be blocked in the Legislative Council unless the Government wins support from the five Greens (WA) members.
Opposition Leader Colin Barnett has supported some of the proposed changes but is firmly opposed to the payroll tax moves, which he said would result in about 4,000 businesses paying more.
For its part, the Government says it will not accept partial changes.
“We need to maintain the integrity of the package,” a spokesman for Treasurer Eric Ripper said.
The payroll tax changes include exempting all businesses with a payroll of $750,000 or less and moving to a single rate of 6 per cent.
“While a single rate means some businesses will pay more payroll tax, most will pay less or none at all,” Mr Ripper said.
“And those who lose on one measure will gain because of other measures.”
This view is supported by the Chamber of Commerce and Industry. CCI chief executive Lyndon Rowe said he believed the overall package, while far from ideal, was an improvement on current arrangements.
“The new single rate for payroll tax makes for far better tax policy, notwithstanding that the measure will impact adversely on some medium-sized businesses,” he said.
Opposition leader Colin Barnett said the Opposition “would never agree to the proposed increase in payroll tax”.
“The average increase in tax for almost 4,000 small businesses will be $4,500 a year,” Mr Barnett said.
Businesses with payrolls of between $1 million and $5 million that typically employ between 25 and 100 people will pay as much as $18,000 extra a year.”
Greens MLC Robin Chapple said his party was concerned that small and medium-sized businesses app-eared to be disadvantaged while larger businesses would obtain a tax break.
“We are not supportive at the moment,” Mr Chapple said.
He said the State Government regularly presented ‘all or nothing’ ultimatums but quite often compromised to get legislation passed.
He agreed that the overall business tax reform package was at risk.
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