WA Nationals put payroll tax front and centre with election pledge

The Nationals party will lift the payroll tax threshold to $1.3 million if they form part of the next West Australian government.

Opposition Leader Shane Love made the announcement on Friday, marking the party’s first major commitment ahead of the March 2025 election.

Opposition Leader Shane Love.Credit: Trevor Collens

The announcement also puts them ahead of their partners in the strained opposition alliance, the WA Liberals, who have long railed against payroll tax because of the burden it placed on smaller businesses.

WA’s payroll tax is 5.5 per cent on the taxable wages paid by employers with a total wages bill above $1 million.

On top of raising the threshold to $1.3 million, Love vowed to introduce a 15 per cent tax rebate for businesses with taxable wages below $4 million, tapering off to businesses at $7.5 million.

Both measures were expected to benefit 11,400 WA businesses and would cost $292 million per year, but Love said it would generate an economic return of about $850 million annually and create about 3500 jobs.

“These costs can easily be accommodated by the GST windfall and will deliver a significant net return to WA’s economy through increased productivity, investment and employment,” Love said.

“Under WA’s payroll tax arrangements, businesses in WA have less capacity to increase employment, invest in the day-to-day running of their business, or expand their operations compared to those in other states.

“This places WA at a significant disadvantage given the cost of doing business in a global economy.

It also makes it harder to attract new businesses to WA, who see our costly taxes as a disincentive to do business here.”

Callum Kerr, owner of Southerlys Tavern and Restaurant in Port Denison, south of Dongara in the state’s Mid-West, welcomed the Nationals’ commitment.

He said wages and superannuation had gone up in recent years, but that wasn’t reflective of an increase in business, so the tax was eating into the business’ profits.

“[Payroll tax] was never meant to capture mum and dad businesses like us ... the threshold hasn’t risen, but the wages have risen,” he said.

“I wouldn’t even call it creep, it’s a bracket sprint.”

Southerlys co-owner Sonya Kerr said hospitality was particularly vulnerable in WA because wages were being driven up by big employers in the resources sector.

“It’s a state government tax grab that’s been under the spotlight for decades,” she said.

“We’re in a state where the mining boom drives wages up but the increase is not commensurate to your business.”

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