11th May 2006 
 
 
 
The Institute of Chartered Accountants welcomes the Government’s 2006-07 State Budget, which delivers continued improvements in the areas of health, education, law and order and public sector efficiency. However, despite the state being awash with surplus money, the Institute is disappointed that the government has ignored the opportunity to make significant concessions in the areas of Motor Vehicle Stamp Duty and Payroll tax.  
 
After two years of lobbying the State Government for tax reform, the Institute’s Western Australian General Manager, Con Abbott said he expected to see meaningful tax cuts, which should have included payroll tax, motor vehicle stamp duty and insurance stamp duty.  
 
Prior to the State Budget announcement, the Institute conducted two surveys with local business people, on the effect that Payroll tax and Motor Vehicle Stamp Duty are having on the Western Australian business community.  
 
“The survey on Payroll tax indicated that that local businesses were critical of the antiquated tax, claiming it discouraged business growth and employment,” Mr Abbott said.  
 
“The Institute called for a reduction in the current rate of payroll tax and an increase in the exemption threshold, which would have ensured that WA remained competitive both nationally and globally and again the plight of local businesses was ignored,” Mr Abbott said.  
 
The Institute’s survey on Payroll Tax revealed that 96% of respondents wanted the State Government to reduce the current rate from 5.5%, with 89% supporting a rate in line with Queensland’s levied rate of 4.75% (currently the lowest nominal rate in Australia) or less and 91% agreed that the current exemption threshold should be increased from $750,000 to more than $1M.  
 
“With wages rising due to both the State’s booming economy and the skills shortage, more small and medium size enterprises (SME) are having to pay payroll tax, creating a burden for employers, who are forced to review the payroll tax implications before making the decision to recruit much-needed new staff or when determining employees’ remuneration levels,” Mr Abbott said.  
 
The Institute also stated that the case has never been stronger for the State Government to wind back the stamp duty taxes on all motor vehicle sales, claiming that the results from a recent survey indicated that 70% of local businesses were aware of instances of motorists purchasing cars interstate to escape being charged excessive stamp duty.  
 
Since 2002, the Government increased the top rate of stamp duty on the transfer of motor vehicles valued at more than $30,000 from 5% to 6.5% , increasing the Government’s take from $160 million in 1999/2000 to $303 million in 2004/05, a hike of 89%.  
 
“This move by private buyers and fleet managers to purchase cars interstate, is detrimental for the motor vehicle industry, potentially costing them hundreds of thousands of dollars in lost revenue,” Mr Abbott said.  
 
The Institute’s survey on Motor Vehicle Stamp Duty highlighted that 87% of respondents agreed that they would support the introduction of a flat rate of stamp duty for all vehicle transfers irrespective of value, with 69% advocating Queensland’s current rate of 2% as a more appropriate alternative.  
 
71% of respondents also agreed that they would support the introduction of a stamp duty free threshold for lower valued cars with $0 - $15,000 believed to be the most appropriate level.  
 
“Introducing a tax-free threshold would reduce the burden on low-income earners, support the motor vehicle industry and create environmental and road safety benefits, with people taking up the opportunity to purchase newer vehicles,” Mr Abbott said.  
 
The Institute will continue to lobby for further reform including the following:  

• The reduction of Western Australia’s Payroll tax rate from 5.5% to 4.75%
 

• An increase in the current exemption threshold from $750,000 to more than $1M
 

• The introduction of a flat rate of stamp duty for all vehicle transfers irrespective of value and
 

• The introduction of a stamp duty free threshold for lower valued cars with $0 - $15,000