Helping SMEs Navigate the Covid Economy

Helping SMEs Navigate the Covid Economy

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ADAPT by Design started this petition to Premier (Western Australian Government)

Dear Premier,

I have been involved in founding three businesses here in Western Australia. Throughout my business journey, I have continually written to the Western Australian government about payroll tax. Since the early 2000s, they have made minor changes to the tax-free threshold. However, I believe the fundamental impact of the tax on Small to Medium Enterprises (SMEs) has not been addressed in a way that makes a material difference. 

I write this letter with the support of an SME community who are all WA founded
companies. Some of the signatures listed are customers of my company; ADAPT by
Design, and who have partnered with ADAPT to build resilient businesses that will create sustained value.

Why is this such a bad tax?

In understanding payroll tax, it is important to understand its origin; the tax was established in 1941 to support child endowment during WW2. In 1971 it was wired in as a path for the government to collect revenue effectively. The following points highlight its impact on SMEs:

  • We are taxed for employing people. It discourages employment.
  • We are taxed even if we are making a loss. It is not related to profitability.
  • We are taxed even if we have never made a profit; common with start-ups. 
  • High tech start-ups pass the tax-free threshold very early in their life because of higher salaries.
  • Payroll tax is material for us and impacts decision-making.

The government spends money on many initiatives to help businesses, and they may get a more significant boost by removing this financial obligation. 

How can it be changed without breaking the budget?

While I am an SME owner who requires revenue to survive, I empathise with the WA Government and the Treasury regarding fundamental changes to their income. From my research, WA tax revenue for FY21 is $8.806 billion, and payroll contributes $3.566 billion. 

I propose payroll tax be removed for all Western Australian founded non-public companies; effectively all WA founded SMEs. 

I do not have the data on what WA-founded SMEs contribute to the $3.566 billion. However, I assert the boost to companies would have a very positive impact. It would remove a historical anomaly and cease to penalise the entrepreneurship we want to encourage. 

I (and other SME community members) are happy to participate in subsequent discussions to design a solution that will lead to a sustained benefit for the WA economy. 

Regards,
Bill Withers
Founder at ADAPT by Design

0 have signed. Let’s get to 200!
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