WA small businesses get some payroll tax relief, but nothing in Tasmanian budget for SMEs

Small businesses in Western Australia have welcomed some payroll tax relief in the state’s latest budget, although employer groups say they were expecting more to help them in the face of troubling economic times.

The comments come as Tasmania also handed down a state budget, with few incentives for small business.

The Chamber of Commerce and Industry of Western Australia said the payroll benefits are welcome, but should be extended.

“CCI…believes the government’s payroll tax relief measures do not provide the meaningful and long-term relief that are long overdue for small business,” CCIWA chief economist John Nicolaou said in a statement.

The West Australian government announced a one-off payroll tax rebate worth $128 million in its latest budget. The state’s current levy is set at 5.5%.

Small businesses with nationwide payrolls of up to $1.5 million in the 2012-13 year will be eligible to receive a full rebate with a maximum value of $41,250, WA Treasurer Christian Porter announced.

These benefits will phase out for businesses with payrolls between $1.5 million and $3 million. In a statement, WA Small Business Minister Simon O’Brien said half of the taxable employers would be eligible for the rebate.

About 3,100 businesses will be eligible for the full rebate, with another 3,600 eligible for the partial rebate.

“This translates to about 6,700 employers effectively not having to pay full payroll tax for about 86,000 employees in 2012-13,” he said.

The payroll tax relief follows commitments made during the government’s election campaign. But employer groups still aren’t happy, saying the relief won’t last for very long, and that many businesses are excluded from claiming.

In a statement, CCIWA said while the budget targets “the right areas”, employers wanted more to help them reduce costs. It criticised the payroll tax rebate for ending after the financial year is up, and also said too many conditions have been placed on payroll tax relief for firms that hire people with disabilities or indigenous Australians.

“The government can afford permanent payroll tax relief. Business is pulling its weight in helping the government achieve a surplus that will grow to $1.4 billion in 2015-16 on the back of more than a 50% increase in payroll tax revenue.”

The WA government also announced plans for a Future Fund, which could be worth more than $4.7 billion in 20 years. The CCIWA said that money would be better used for corporate tax relief.

The state’s Small Enterprise Network also said the payroll tax system needs more reform than a one-year rebate can allow, including dropping the rate by at least 0.5 percentage points.

Meanwhile, the Tasmanian state budget was handed down yesterday, although it delivered little for small business. The state government announced $68 million worth of cuts to public sector agencies, although residents will receive $300 million over four years due to higher power prices.