The Chamber of Commerce and Industry WA (CCI) says it is disappointed the payroll tax rate increase will proceed and that it will cost WA jobs and hurt small business.
CCI Chief Executive Officer Deidre Willmott said CCI modelled the impact of the Government’s payroll tax hike, which identified that between 1,334 and 5,297 WA jobs will be lost in the first year, and at least $510 million will be wiped from economic output.
“About 32 per cent (426) of the conservatively estimated 1,334 job losses would be felt directly by large businesses, with the remainder (908) lost through the supply chain, including small and medium sized enterprises (SMEs),” Ms Willmott said.
“The reality is that when faced with a sudden increase in costs, such as a payroll tax hike, businesses are forced to make a choice – they can reduce wages, reduce their headcount, cut back on contracts to SMEs, or pass the cost on to shareholders.
“The industries that will lose the most jobs are mining (269), construction (234), administrative and support services (120) and manufacturing (113), which are all crucial to WA’s economic recovery. These are our blue-collar tradesman, customer service, and administration workers.
“If businesses are forced to recoup the cost of the increase entirely by reducing employment then job losses will be much worse, increasing significantly to 1,891 direct job losses and 3,406 indirect job losses (5,297).
“CCI is pleased that the Liberal Party have recognised the impact a payroll tax rate increase will have on small businesses with costs passed on through the supply chain, and have called on the Government to bring forward consideration of CCI’s proposal to increase the payroll tax threshold.
“We also welcome Premier McGowan’s commitment in Parliament last week to discuss an increase to the payroll tax threshold with CCI ahead of next year’s budget, before the payroll tax rate is introduced on 1 July 2018.
“To truly protect WA’s small and medium sized businesses, CCI has called on the Government to increase the payroll tax threshold by $100,000 – from $850,000 to $950,00. This will create 278 direct and 602 indirect jobs (880), which will partially offset the minimum 1,334 jobs that will be lost by the payroll tax rate increase.
“This means the Government would still raise 65 per cent of the revenue they budgeted ($88 million), while protecting 65 per cent of the jobs that would be lost.
“CCI urges the Government to protect WA jobs by increasing the payroll tax threshold to help offset the impact of their payroll tax rate hike.”
To read CCI’s Payroll Tax increase for large WA employers; Economic Analysis click here.