Cut to ‘jobs tax’ will deliver for WA’s struggling small and medium enterprises and workers

The Chamber of Commerce and Industry WA (CCI) strongly welcomes the State Government’s announcement of much-needed payroll tax relief for WA businesses, by lifting the payroll tax threshold to $1 million by 2021, including an interim lift to $950,000 at the start of next year.

The decision follows a significant CCIWA-led campaign to reduce the heavy payroll tax burden on WA businesses in order to create jobs, support wages growth, increase hours for existing workers and to support small business. It is the most important decision the State Government has taken to boost the economy because it benefits every WA industry evenly, helping to diversify the economy.

The State Government’s capacity to deliver these measures clearly reflects the State’s finances are significantly improved. It was made easier as a result of the campaign to fix the GST last year. WA was more reliant than other states on payroll tax under the old GST distribution.

This is another significant win for WA, led by CCI and the business community’s advocacy. It shows that the State Government is listening to the business community to remove barriers to growth and job-creation in our economy.

CCI analysis shows that the first threshold lift on 1 January next year will support the creation of 900 jobs and provide a boost of $283 million to the economy in the first year alone.

The decision to raise the payroll tax threshold to $1 million in 2021 goes beyond CCI’s expectations.

It comes at a critical period for the WA economy. Many smaller businesses in WA are struggling due to weak demand and increasing operating costs. This change will provide welcome relief and is expected to improve business confidence.

While WA’s trend unemployment rate has reduced to 5.7 per cent, it has held above the national rate for 51 consecutive months. Reducing the payroll tax burden for smaller businesses will stimulate much-needed job creation, in an economy that has in recent decades, taken pride in being the powerhouse of the broader national economy.

It also responds to the growing uncertainty in the global economic environment. WA does the heavy lifting in Australia’s trade effort. It is highly exposed to the headwinds in the global economy, including the US-China trade war. In this environment, it is vital that our State and Federal Governments remain vigilant in responding to changes in the economy.

The current emphasis on strong financial management while prioritising regulatory reform and stronger infrastructure and business investment, is the right one.

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