The State Government has started its tax reform package by cutting the rate of payroll tax to 5.5%. We talk to industry about why more needs to be done.
The State Government has started its tax reform package by cutting the rate of payroll tax to 5.5%. We talk to industry about why more needs to be done.
Substantial cuts to the rate of payroll tax is one sure way for Premier Geoff Gallop and his treasurer, Eric Ripper, to get business behind their plans, judging by the results of WA Business News’s straw poll.
Business leaders have also identified stamp duty and land tax as targets.
Chamber of Commerce and Industry of WA chief executive John Langoulant believes the Government should take advantage of the current opportunity to improve the competitiveness of WA’s business tax structure.
“The two big taxes, payroll tax and stamp duty, we are leading Australia in terms of the severity of those taxes,” Mr Langoulant said.
He said it was likely the Government would include some electoral ‘sweeteners’ targeting consumers, but counselled against moves like the rumoured abolition of motor vehicle registration fees.
“The priority should be significant reductions to the big taxes like payroll tax and stamp duty,” Mr Langoulant told WA Business News.
Ahead of an expected announcement on tax policy this week, he said the rate of payroll tax should be cut from 6 per cent to no higher than 5.25 per cent, which would cost $180 million.
Schaffer Corporation managing director John Schaffer is one of many business people keen to see payroll tax slashed.
“The Government should not tax people for creating employment, they should be thanked,” Mr Schaffer said.
“If they must tax, the levels can be at much lower rates as the quantum automatically increases as wages increase.”
StateWest Credit Society chief executive Greg Wall believes substantial cuts to payroll tax would have positive flow-on benefits.
“This would foster more employment opportunities and make WA business more competitive nationally and internationally,” Mr Wall said.
Most business leaders surveyed by WA Business News also favour a cut in conveyance duty rates.
UWA Business School economist Michael McLure takes a slightly different tack.
His number one target is the abolition of stamp duty on business conveyances, and he has a surprising source for extra revenue.
“In the longer term, this abolition should be extended to all conveyances, including homes purchased by residents, as this will remove a tax obstacle to labour mobility” Mr McLure said.
“The forgone revenue could be readily recovered by subjecting residential homes to land tax, which does not act to restrict the mobility of labour.”
The property industry has been lobbying hard for substantial reductions in conveyance duty and land tax.
Real Estate Institute of WA president Greg Rossen wants the Government to start by cutting taxes to the level that applied in 2001, when Premier Gallop promised there would be no tax increases.
The Motor Trade Association is another industry group pushing hard for tax relief and vowing to campaign aggressively if it doesn’t get its way.
MTA executive director Peter Fitzpatrick says stamp duty in WA is so high that some people are going to Queensland to buy new cars.
He wants to see the current tiered stamp duty structure, with rates ranging from 2.75 per cent up to 6.25 per cent, replaced with a simple two tiered system.
He suggested a rate of 3 per cent for cars worth up to $40,000 and a rate of 4 per cent for vehicle sales worth more.
Amidst all the debate over tax cuts, some people believe water charges need to increase.
“Water is too cheap for many users, so they treat it essentially as a free good and use it inefficiently, ACILTasman director Ian Satchwell said.
“There need to be some stronger price signals for some users to drive better water use efficiency and to provide the wherewithal to better manage this scarce resource.”
This view was supported by Delta Capital’s Tony Brennan.
“I would actually increase water charges and make some serious investment in the future of our water needs which in my view are best described as dire,” Mr Brennan told WA Business News.
