WA must aspire to a more competitive economy

The Chamber of Commerce and Industry of Western Australia (CCIWA) is strongly committed to advancing the best economic policy settings for WA, to support the growth of businesses, jobs and prosperity. This involves moving towards more competitive tax settings, including the potential transition from stamp duty to land tax as part of a broader effort to reform national and state taxes.

The Premier has indicated today that he is not convinced of the merit in taking action to reform WA’s anti-competitive taxes. This is unfortunate as we need to thoroughly examine options that will bolster job creation and support a return to economic growth.

Since the outset of COVID-19, the business community has clarified the need to deal with deep structural issues which challenge the performance of the Western Australian and national economy. This principally relates to tax reform and regulatory reform, including greater labour market flexibility. The RBA Governor Philip Lowe has in particular implored state and federal governments to push for fundamental tax reform.

Non-competitive or inefficient taxes disincentivise behaviour within the economy which ought to be encouraged. Stamp duty makes it more expensive to move house for work, or to be closer to preferred schools. Reducing or removing stamp duty would benefit our regional centres, in making it cheaper for workers to migrate and reducing the reliance of resource companies on FIFO workers. Payroll tax makes it more expensive for businesses to employ more Western Australians. Transitioning away from such taxes will improve economic growth.

There are also important social benefits to reform. Stamp duty is an inequitable tax, punishing those people who need to move more throughout life. Reform would make it easier for people from poorer backgrounds to move into higher socio-economic areas, perhaps the most important factor in helping families to break out of generational disadvantage.

CCIWA recognises the complex challenge posed by the pursuit of tax reform. We are currently modelling various scenarios which would enable Western Australia to transition and replace inefficient taxes like stamp duty with broad-based ones like land tax, over a suitable period of time.

It is imperative that our State can engage in an informed conversation about the options to make this transition, if the analysis proves it would be of benefit to our economy and will create jobs. CCIWA recognises the importance of the current measures such as housing construction incentives, which are necessary to stimulate immediate demand for housing. However, such measures do not make WA a more attractive place to live, invest and grow a business in the long term. Structural reform is necessary in order to recapture the population growth required to sustain a thriving economy.

CCIWA remains committed to advocating to all levels of government and the community to advance these important reforms, and other measures contained in our Recovery Reform Roadmap.

Chris Rodwell

CCIWA CEO

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