WA government to raise payroll tax threshold but business groups concerned about lack of structural reform in budget

Western Australian business groups have welcomed the state government’s announcement that it will honour an election commitment to increase the state’s payroll tax threshold from July.

WA Treasurer Mike Nahan delivered his first budget on Thursday, posting a narrow surplus of $175 million for the 2014-2015 financial year.

In his budget speech, Nahan said his government will legislate to increase the payroll tax exemption threshold from $750,000 to $800,000 from July 1.

The threshold will then move to $850,000 from July 1, 2016.

Nahan said the measure, which was included in the 2013 budget, will support the employment practices of more than 16,000 small and medium size companies across the state, with the financial benefit expected to total $190 million over four years.

The Chamber of Commerce and Industry of Western Australia welcomed the move, with chief executive Deidre Willmott saying in a statement the organisation is pleased to see the government honouring its election commitment.

The move follows a decision by the Victorian government to cut the rate of payroll tax in the state in its budget, but leave the payroll tax threshold unchanged.

However, the CCI slammed many of the other measures included in Premier Colin Barnett’s budget, which it says “has not set the state on a track to live within its means and regain the prized AAA credit rating”.

The CCI said “government expenditure will continue to grow without underlying reforms and debt is showing no signs of peaking in the forward estimates”.

The business group also criticised a number of tax hikes signalled in the budget, with Willmott telling the ABC “any increase in taxes and charges will increase the costs of doing business in WA”.

Among the tax changes included in the budget is a 10% increase in land tax, a scaling back of the stamp duty exemption for first home buyers, and significant increases in the Perth Parking Levy and the Landfill Levy.

WA businesses are also likely to be affected by increases in power prices across the state, with electricity bills set to rise by 4.5% and water rates to increase by up to 6%.