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State Budget tax watch

AFTER last September’s ‘no new taxes’ budget and a business tax review, most WA industry sectors are not hopeful of any Government help in the May 16 budget.

History shows that taxes did rise, despite the Labor Government’s election promise that they would not.

The Government had expected to keep the budget in the black by reigning in spending and creating an efficiency dividend, but blamed its predecessor for the poor state of WA’s finances.

Payroll tax rose, as did land tax. A Premium Property Tax even reared its head for a brief period before being consigned rather rapidly to the scrap heap.

However, most of these tax rises were at the large end of the scale, leaving small businesses – about 96 per cent of WA’s business base – largely unaffected.

Results from the review of business taxation will be released in the budget, but industry is only expecting some tinkering at the edges.

One of the pre-requisites for the review was that it be revenue neutral.

The economic picture for this budget appears to be the same as it was last year.

Economists believe the Government has not cut spending as much as it said it would, but at the same time it will receive big revenue increases from minerals and petroleum royalties, and stamp duties from the recent housing boom.

However, this problem of overspending is not endemic to the Labor Party.

The Court Government exceeded most of its spending targets during its time in power but also benefited from big mining sector revenues.

Most business sectors hope there will be for no further tax rises and that some State taxes, such as stamp duty and payroll tax, will be reduced – but are not holding their breath.

Small business does not want any further tax rises, even though it managed to dodge most of the increases from last year’s budget.

Even the extension of land tax to trap private residences held through family trusts has not had much of an impact. That is expected to catch about 1,400 small businesses.

However, its main concerns are in the area of industrial relations, the 1 per cent superannuation rate increase and interest rate rises. The last two the WA Government has no control over, however.

WA’s mining sector came through the last budget relatively unscathed – even though it bore the brunt of the tax hikes.

Last September its key body, the Chamber of Minerals and Energy, mainly wanted a budget that would retain WA’s AAA credit rating and contained no tax hikes.

It received the first part but missed out on the second part.

While the rural sector, which finally had a good year after three seasons of drought and frost-blighted crops, did not get hurt by tax rises, it was instead hit by spending cuts.

The Department of Agriculture’s funding was cut by 10 per cent last year and further cuts are expected in this budget.

Road funding to rural areas also has suffered.

Pastoralists and Graziers Association president Barry Court said the spending cuts could be a mixed blessing for farmers.

“Sometimes lean and mean means you have a good think about things and become more efficient,” Mr Court said.

“But by the same token, just because we’ve had one good year it doesn’t mean the government should go pulling more money out of farming.”

WA’s property sector wants tax cuts aplenty, particularly in the areas of commercial stamp duty, but is not overly confident that they will be delivered.

The motor industry wants land tax and stamp duty on motor vehicle registrations reviewed.

Its retailers are getting hurt by land tax and manufacturers, particularly of trucks and trailers, are being hammered by the 5 per cent registration stamp duty on motor vehicles worth more than $40,000.

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