Article by Josh Zimmerman courtesy of the West Australian.
Overhauling WA’s onerous payroll tax regime would pump $1.35 billion into the State’s economy and create nearly 4000 jobs, laying the platform for a new wave of investment while preventing fast-expanding companies from relocating to the east coast.
That is according to independent research commissioned by the Chamber of Commerce and Industry WA, which will be used to reignite calls for the “tax on jobs” to be slashed in the next State Budget.
Under the model favoured by the chamber, WA’s payroll tax threshold would be raised from its current $1 million to $1.3m, carving out more smaller businesses completely.
Companies with a payroll between $1.3m and $4m would get a 15 per cent rebate, which would taper to zero for firms with wages between $4m and $7.5m.
If enacted, for businesses with a payroll of $3m, their liability will drop from about $127,000 per year — the most of any State — to closer to $96,000.
That is slightly below the combined average of the other states ($97,623), which CCIWA chief economist Aaron Morey said would make WA a far more competitive jurisdiction and encourage investment.
“Payroll tax is a tax on jobs and a tax on success — the more people you employ, the more you pay, and it’s a real burden on smaller and family businesses who are dealing with the ever-rising cost of doing business,” Mr Morey said.
“We know there are businesses in WA who are actively considering a move interstate or overseas because of the unfair payroll tax burden they’re facing in WA.”
The research by consultancy firm Pracsys found 44 per cent of the 449 WA businesses surveyed would use a cut in payroll tax to hire more workers, while 37 per cent said the savings would be reinvested back into their operations.
Among those is Xanadu Group founder and chief executive Omair Chodhry, who controls a diverse group of companies with more than 320 mostly WA-based staff and a combined payroll tax burden of about $100,000 a month.
The revenue-producing arms of Xanadu — one in child protection and the other in disability care — account for the bulk of the payroll bill, which Mr Chodhry said was acting as a handbrake on the expansion of other ventures.
That includes a health technology startup developing “world-first” software to support cardiologists.
“If I was paying even $10,000 less (per month) in payroll tax, I’d be able to hire a full-time project lead,” Mr Chodhry, pictured, said.
“Instead we’re taking it slow because we don’t want to disrupt cashflow from the income-generating entities.”
Mr Chodhry said he was often asked whether he planned to relocate his headquarters to another State where he would receive more favourable payroll treatment if the health software takes off.
Mr Morey said WA’s payroll tax system meant the State was not an attractive option for investors who had the option of doing business elsewhere.
Off the back of nearly $20b in surpluses since 2019, Mr Morey said there had never been a better time to pursue payroll reform.