Payroll tax burden highest in WA

30 August, 2017

Western Australian businesses are paying the highest rate of payroll tax in proportion to total labour costs in the country, Australian Bureau of Statistics figures released this week reveal. 

According to the Labour Costs, Australia, 2015-16 statistics, payroll tax paid by employers totalled $21.8 billion nationally, representing 2.9 per cent of total labour costs.

As a proportion of total labour costs WA is paying the highest rate at 3.2 per cent and the Australian Capital Territory is paying the least at 1.9 per cent.

WA businesses paid $3.3 billion in payroll tax in $2015-16.

Currently the payroll tax rate sits at 5.5 per cent and the annual threshold is $850,000.

CCI chief economist Rick Newnham says the figures show that payroll tax is a huge burden on WA businesses. 

“Payroll tax presents a significant barrier to employment as it deters small business owners from taking on more staff as they approach the tax threshold,” he says.

CCI has been calling on the State Government to ensure stability in the WA economy by not introducing any new fees or taxes for business and Newnham says in the lead up to the State Budget it is imperative they do not reduce the threshold.

“WA employment must be supported by maintaining the current payroll tax rate and threshold,” he says.

“The payroll tax exemption for trainees and apprentices should also be maintained.”

He says eventually the State Government should increase the threshold to boost jobs.

“Lifting the payroll tax threshold will help put Western Australians back to work, especially when four out of five WA jobs are created by the private sector,” Newnham says.

“Employment should be stimulated by lifting the payroll tax threshold when the domestic economy (i.e. State Final Demand) begins to expand again.”

►Hear Rick Newnham unpack the budget at the Post State Budget Breakfast on September 13.