The state's peak business lobby group has called for more than $500 million in tax cuts as part of reforms it says are needed after releasing research showing Western Australia has the highest per capita tax take.
The state's peak business lobby group has called for more than $500 million in tax cuts as part of reforms it says are needed after releasing research showing Western Australia has the highest per capita tax take.
The Chamber of Commerce and Industry said the state tax take had almost doubled since Labor came to office to $5.9 billion, with the per capita revenue rising from about $1,500 per person to around $2,700, ahead of NSW at almost $2,600.
The CCIWA research also showed WA was the second highest taxing state when compared on the basis of final state demand, reiterating earlier criticism of the WA government for changing its target measure to a far more flattering comparison with gross state product.
CCIWA has made a pre-budget submission calling on the government to reduce taxes and introduce indexation to stop bracket creep.
The biggest of the changes it wants is a reduction of payroll tax to 5 per cent from 5.5 per cent, a saving to business of almost $170 million.
It also wants the current $750,000 threshold for payroll tax indexed.
CCIWA said that the number of employees a company could employ on average wages before stating to pay payroll tax was 12, down from 15 in 2004.
"With the wages explosion we have had the amount of people a business can employ is shrinking," said CCIWA chief economist John Nicolaou.
The chamber's stance remains that the government has become complacent and allowed spending to surge on the back of rising tax revenue.
It believes the state must commit to a longer term program of cutting taxes and costs to improve WA's competitive position, especially with an easing of economic conditions expected.
Mr Nicolaou said the cuts suggested were affordable, and were below the $841 million in increased revenue which the state has projected on top of its original May budget forecast.
Premier Alan Carpenter, meanwhile, has refuted the claims that WA is the highest taxing state in the nation, saying CCI's per capita measurement was simplistic given the state economy had more than doubled in the period since Labour took office in 2001, and infrastructure growth was significant.
Mr Carpenter said current taxation levels were appropriate, and he was not prepared to comment on the possibility of tax cuts in the May budget.
"If we set tax levels that were deterring business investment you would have to reconsider them...But business investment is flooding into the state," he said.
Below is the full CCIWA announcement:
A new report by the state's peak business organisation, the Chamber of Commerce and Industry of WA, shows West Australians are by far the highest taxed in the nation, paying
17 per cent more than the national average.
The CCI report reconfirms WA's ranking as the highest taxing and least tax competitive state in the country. It shows the government's tax take has almost doubled to $5.7 billion over the past six years, with the average West Australian paying an extra $1,219 in tax annually since Labor came to office in 2001.
CCI does not accept Treasurer Eric Ripper's misleading rhetoric that WA is one of the most tax competitive states. In 2005, Mr Ripper switched to measuring tax collections as a proportion of gross state product, which masked the position by making his revenue look smaller because of the massive value of WA resource exports.
Meanwhile CCI has lodged a detailed pre-budget submission with the State Government which calls yet again for meaningful business tax relief and the development of broader policies to sustain the current economic boom.
The submission sets out CCI's concerns with the Government's current financial strategy including its rampant spending and unsustainable wages growth - which are largely being funded by overburdened taxpayers.
Business is seeking immediate and meaningful tax relief to improve the state's tax competitiveness, including -
- Cutting payroll tax by 0.5 per cent to 5.0 per cent in the 2008-09 budget as part of a strategy to create a business environment that promotes growth and development.
- Broader tax relief by reducing stamp duty rates on property transactions to 2001 levels, indexation of tax thresholds for payroll tax and conveyance duty to stop bracket creep and further simplification of land tax.
CCI chief economist John Nicolaou said the tax reforms proposed by CCI were affordable and within the Government's reach, given its surpluses and the strength of the state economy.
The reforms could be expected to cost around $529 million in 2008-09.
To put this into context, the government in its mid-year review increased its projected tax take for this financial year by $841 million. Mr Nicolaou said implementation of CCI's proposed package would still leave the government $312 million better off than originally forecast in its May budget.
The submission also highlights a range of financial management reforms which CCI said the Government needed to undertake as a matter of urgency.
It said that since the current government came to office seven years ago, general expenditure had increased by 45.2 per cent or $4.7 billion - a trend which appeared set to continue with spending tipped to blow out by a further $3.3 billion by 2010-11 if restraint was not shown.
Mr Nicolaou said it was imperative for the future strength and growth of the WA economy that the government found the will to deliver much needed economic reform.
"WA's current once-in-a-lifetime economic boom is creating many benefits, but also many challenges for businesses of all sizes. It is therefore vital the State Government uses today's prosperity to lay a sound and responsible base for the future to ensure the economy remains strong for many years to come."
Meanwhile, the CCI submission seeks a commitment from the Government to address a range of issues that have the potential to threaten the state's economic prosperity. Severe labour shortages continue to plague WA business and remain a major barrier to further investment and expansion. With predictions WA will need an extra 400,000 workers over the next decade, the need for the State Government to take the lead on the issue is crucial.
CCI says housing affordability and residential land shortages need to be resolved if interstate and overseas workers are to move to WA in pursuit of the career opportunities on offer.
The Government must also use its wealth to invest and plan for the future. CCI has compiled a list of economic and social infrastructure projects that will fuel greater investment and attract new businesses to WA, including the development of a state broadband network; expanding and upgrading Perth airport; redeveloping the Perth foreshore and the Northbridge Link project.
The CCI pre-budget submission said the government also must improve the state's competitiveness by agreeing to a new round of reforms addressing outstanding competition policy issues which are seen as an unnecessary clamp on growth and investment. Top of the agenda should be the elimination of a range of anti-competitive rules and regulations including retail trading hours laws, the state's archaic potato marketing regulations and petrol price retailing.
Although the government has been unwilling to deliver meaningful taxation relief and economic reform in previous years, CCI remains hopeful it will finally act in its final budget before the next state election.
