WA Budget 2025: Opposition calls for rethink on payroll tax as companies feel the pressure

Shadow treasurer Sandra Brewer has called on the Cook Government to reform payroll tax after it was left untouched in this week’s State budget.

Ms Brewer said the Government should look at either increasing the threshold to have to pay the tax or to lower the rate of the tax itself.

Despite the call, she did not have a suggestion on how much to change either number by.

Ms Brewer said the pleas from businesses had been falling on deaf ears.

“Industry associations and employer groups have been asking for a higher threshold and a lower rate to be more competitive with other Australian states for years now, but the government doesn’t listen,” she said.

“The opposition is open to listening to all views on payroll tax but we encourage the government to use their parliamentary power and their record receipts of royalties and taxes to look at reforming this tax.”

Currently, business with wages of more than $1 million pay payroll tax, with the rate increasing progressively through to business with wages of more than $7.5 million where the full rate of 5.5 per cent is applied.

According to the Budget, the payroll tax raised $5.88 billion in the 2024-25 financial year and is tipped to rise to $6.15 billion in 2025-26.

By 2028-29, the revenue raised by the tax is expected to surpass $7 billion.

Surveying business Vision Surveys Consulting owner Jay Sidhu said he was feeling the pinch from payroll tax.

“Payroll tax is just an unnecessary burden to businesses, especially businesses like us in an economy like this where we’re trying to hire more staff,” he said.

“It’s being that hindrance for us to even look at potentially hiring more people, it’s something that we have to consider very strongly before we actually think of growing sustainably.”

Ms Brewer also linked the tax to the current housing shortfall, saying the tax disincentivized construction businesses from growing, limiting its capacity.

“I’m constantly approached by businesses who are finding the rising costs of doing business extremely difficult, and payroll tax is just another cost,” she said.

“It has to be passed on to clients or consumers and that contributes to everything going up.

“We see it particularly in small businesses that are working in the housing sector they have enormous costs and payroll tax is another burden that needs to be passed on to, ultimately, the home buyer.”

A State Government spokesperson said taxes were being constantly monitored.

“Our Government continually monitors its tax settings, including payroll tax, to ensure our tax system is fair and competitive with other jurisdictions,” they said.

“It’s important to note more than 90 per cent of WA’s 235,000 businesses don’t pay payroll tax — only larger businesses, and in recent years we’ve seen incredibly strong growth in business investment.

“Our government has delivered a range of tax reforms to support businesses and reduce red tape, including the biggest increase in the payroll tax threshold in more than two decades in 2020 when we increased the payroll tax exemption by $150,000.

“This provided a payroll tax cut to about 70 per cent of payroll tax paying businesses, including around 1000 that were no longer required to pay payroll tax.”