Tax break to keep WA in business

TREASURER Troy Buswell has stunned the West Australian business community by unveiling a unique plan to refund their payroll tax for a year, a move he says will stimulate growth and save jobs.

TREASURER Troy Buswell has stunned the West Australian business community by unveiling a unique plan to refund their payroll tax for a year, a move he says will stimulate growth and save jobs.

The one-off rebate will see about 6700 businesses get a full or partial rebate on their 2009-10 payroll tax.

Mr Buswell said the budget was "unashamedly" framed around the need to protect jobs in tough times, and payroll tax relief was one component.

About 4500 employers with an annual payroll of up to $1.6million (generally up to about 28 employees on average earnings) will get a full refund of their 2009-10 payroll tax, worth up to $46,750.

The money will be repaid in 2010-11 after final accounts are reconciled. A further 2700 larger businesses with payrolls of up to $3.2million will get partial rebates calculated on a sliding scale.

The scheme caught the business sector by surprise after years of aggressive campaigning about payroll tax being a disincentive to job creation.

Western Australia's payroll tax rate of 5.5 per cent is one of the highest in the nation.

Mr Buswell said the initiative would cost the Government $100million but it would help employers retain workers by offsetting the payroll tax of about 68,000 employees.

He also promised to introduce legislation to provide permanent payroll tax exemptions for parental leave and volunteer emergency services work as another aid to employers.

Opposition Treasury spokesman Ben Wyatt said payroll tax relief was welcome but the Government's plan had "missed the mark" by failing to link the rebates to any form of employment outcome.

"There's no incentive to create more jobs or take on more apprentices," he said.

"Employers can just keep numbers as they are, or even cut staff and still benefit. They should be rewarding and encouraging them to take on more workers."

Mr Wyatt said it was extraordinary that the strategy also finished the year before unemployment was due to peak, and it clearly needed to go further. Unemployment in the state is forecast to rise to 5.75 per cent in 2009-10 and then 6.75 per cent in 2010-11 when the benefit cuts out.

West Australian Chamber of Commerce and Industry chief executive James Pearson welcomed the decision but cautioned the Government that it would have to do more.

"We'd like to see that kind of measure brought in permanently because small business has much work to do, along with medium and large business, in order to take the state and country through the difficult economic times," he said.

"The business community has been calling for meaningful payroll tax relief for many years and it's pleasing that at last a state government has heeded those calls. (But) it doesn't go far enough and it's only a temporary measure.

"We'll be pressing the Government to make meaningful payroll-tax relief a permanent feature of West Australian state finances."

The budget papers said about a third of employers registered for payroll tax would receive the full rebate, while a further 20 per cent would get a partial rebate.

In the lead-up to the budget, the business sector was calling for payroll tax to be dumped.

Premier Colin Barnett said the Government had to make hard decisions, but creating and protecting jobs was a priority.

"Because of the global financial crisis, we have not had the luxury of billions of dollars in surplus but through good government we have made tough decisions to ensure the state's future," he said.