Jobs growth in WA’s small businesses could remain limited despite State Government changes to payroll tax to boost employment, a financial planner has warned.
Concerns have been raised that small businesses might not dramatically boost the State’s employment market, as the McGowan Government introduced payroll tax relief to create jobs and encourage business reinvestment.
The government announced on Thursday a change in the payroll tax threshold for nearly 12,000 small and medium businesses, increasing it by $150,000 over the next two years.
Under the plan, WA businesses with payrolls of up to $850,000 are currently exempt from payroll tax, but the threshold will be increased to $950,000 from January 1 2020 and again to $1 million from January 2021.
The changes would provide $170 million in payroll tax relief over four years.
However, limited savings from the increased threshold could reduce business’ ability to employ more staff, with total savings under the changes ranging from around $2,000 to $9,000.
Speaking to WAMN News, financial planner and Curtin University instructor Elson Goh said the savings may not be enough to hire large staff numbers.
“Whilst you can see that there is an increase in the threshold, it all depends on how much the businesses are saving and are businesses willing to spend the money to hire new additional staff,” Mr Goh said.
“The question would now be would that be enough to motivate businesses to put on additional staff.”
Mr Goh said there needed to be work available for employers to hire.
“At the end of the day it’s all about supply and demand. Is there sufficient supply or demand for the goods and services that would cost businesses to put on additional staff,” he said.
However, he added medium sized businesses could benefit.
“I think they can look at if they are considering of putting on additional staff, this may help push over the line,” Mr Goh said.
The McGowan Government introduced the changes in an effort to support small businesses “that were doing it tough.”
Premier Mark McGowan said small businesses were “the heart and soul for our economy.”
“We want to make sure we provide some relief to allow them to get on and do what they do best which is employ West Australians,” he said.
“We are on their side, that’s why we’re providing this.”
Treasurer Ben Wyatt said that the cuts were made possible by improvements to WA’s budget.
“For three budgets now, we’ve focused very, very hard on restoring the finances of the state,” Mr Wyatt said.
“We’ve wanted to now for some time if the capacity came along, to increase the payroll tax threshold. We now have that capacity and that’s what we’re doing today.”
“We can now invest more broadly in our economy.”