SMALL businesses will be protected from the McGowan Government’s Budget repair measures but big businesses will temporarily pay a higher payroll tax rate.
Announcing the measure on Thursday, September 7 the state government said a temporary progressive payroll tax scale would apply to big employers for a limited period of five years from July 1 next year.
The government said the change would affect less than 1 per cent of Western Australian businesses and was expected to raise $435 million over the forward estimates period.
Treasurer Ben Wyatt said Western Australian employers with an Australia-wide payroll exceeding $100 million – but not exceeding $1.5 billion – would have that part of their payroll taxed at a rate of six per cent (up from the current rate of 5.5 per cent).
“Western Australian employers with an Australia-wide payroll exceeding $1.5 billion will have that part of their payroll taxed at a rate of 6.5 per cent,’’ he said.
“Employers who also operate outside of WA will pay the same effective rate of tax on their Western Australian wages as employers with the same Australia-wide wages that operate solely in WA.’’
Mr Wyatt said there would be no change in payroll tax for the 92 per cent of payroll tax payers that have Australia-wide payrolls of $100 million or less.
He said big businesses and industries that were generally highly profitable, including mining, construction, retail, transport and the financial sector would be affected the most.
“Payroll tax is generally considered to have similar economic impacts as a flat personal income tax or a broad-based consumption tax.’’
He said repairing the Budget was tough but necessary and required contributions from all members of the community including the major corporate sector.
“It is expected that less than one per cent of businesses in Western Australia will be impacted by this change.
“Around one-fifth of the additional revenue generated from this measure is expected to be paid by the larger iron ore producers in the state.’’