Payroll tax breaks could create nearly 900 jobs

Written on the 24 January 2017

A payroll tax break could create nearly 900 jobs for Western Australian workers, according to independent research from the Chamber of Commerce and Industry of Western Australia (CCI).

CCI-commissioned research has found that lifting the threshold from its current level of $850,000 to $950,000 could directly create 278 jobs and indirectly create 602 jobs.

The findings estimated the total economic benefit to the state would be approximately $283 million.  CCI Chief Executive Officer Deidre Willmott said the business community had long called for meaningful payroll tax
reform and given WA's soaring jobless rate, the time for real change was now.

"Business creates jobs, not governments at a time when Western Australia's jobless rate is unacceptably high, it is critical that both parties commit to meaningful payroll tax reform that will empower businesses to create jobs and stimulate the economy," Ms Willmott said.

"Payroll tax is a tax on jobs that holds businesses back from growing and creating more jobs for workers as SMEs' total payroll approaches the current $850,000 threshold, businesses tell CCI they stop employing more workers to prevent their business from suffering under the additional tax.

"CCI has long called for the payroll tax threshold to be lifted incrementally before being eventually abolished if we cancreate 900 jobs through a $100,000 lift in the threshold, think of how many Western Australians could get back to work if we abolished this tax on jobs completely. A $100,000 threshold lift would directly benefit all SMEs with a payroll of between $850,000 and $7,500,000 per year, which is between 10,000 and 12,000 businesses.

"The current jobless rate of 6.6 per cent is still the second highest in the country and miles ahead of the national average of 5.8 per cent payroll tax is a roadblock to employment and allowing it to continue while nearly 100,000 Western Australians are out of work is simply unacceptable and the WA business community is calling on all major parties to commit to meaningful payroll tax reform as an immediate priority in the next term of government."

Ms Willmott said while the business community was demanding real payroll tax reform, relief for SMEs could not be funded by slinging another tax at the state's resources industry.

"While payroll tax reform is critical, the proposal by the WA Nationals to fund payroll tax relief through changing State Agreements with BHP and Rio Tinto is a flawed policy that will hurt SMEs throughout the resources supply chain and will see 90 per cent of the proceeds go to other states through the GST distribution model," Ms Willmott said.

"Lifting the threshold by $100,000 would mean a $47 million reduction in payroll revenue given the estimated $283 million wider economic benefit, lifting the threshold would be a relatively small, targeted investment that would have minimal impact on the budget.

"At a minimum, CCI and the WA business community are calling for payroll tax to be immediately indexed to CPI to prevent further bracket creep. Over the next term of government, the threshold should begin increasing incrementally by at least $50,000 per annum to eventually reach $1.5 million, before the tax is abolished completely.

"A thriving business community injects money back into the economy, so it is critical that the future State Government creates a business-friendly environment that encourages businesses to expand, attracts investment into the state and enables businesses to succeed and pass that success on to the community through job opportunities."

Source: CCIWA Media release