Empty shops | Tax and rates a burden on retail

In the Mail’s series looking at empty shops in South West communities a business owner has reached out to talk about some of the challenges retailers are facing today.

Hillzeez owner Glenn Callegari said increases to rates, payroll and land tax were some of the challenges being faced by retailers.

 Mr Callegari said a business had to pay payroll tax whether they had made money or not and it was not uncommon to run at a loss during the quieter months.

“I appreciate all my staff and are worth every cent they get paid, but is it equitable that the state government taxes me $3 an hour per adult employee on a public holiday?  $2.40 per hour on a Sunday?” he said.

After legislation was changed under the previous government two years ago, Mr Callegari said he paid almost $30,000 more in payroll tax which went straight to the state government.

“Forty per cent of the state’s revenue comes from payroll tax.  A fine for employing people,” he said. 

“Every time I employ someone or give them a pay rise, I am fined by the state government through payroll tax.  It’s a clamp on my growth.

“My business fleet vehicles should have been replaced, but I am burdened with payroll tax.  Which are sales local car dealers have missed out on.”

Mr Callegari also said when land tax was changed commercial property owners in WA were allowed to pass this tax on to tenants, which hit employers like himself.

“These changes happened under the Liberal Party, but Labour hasn’t rolled back these changes.  Nationals had a plan but Grylls was killed off by the CFMEU who scare mongered voters away. 

“A 25 cent per tonne rental fee hasn’t gone up since the 1960’s for Rio and BHP.  .

“While many argued it was bad policy – why is it good enough for a small business taxes to multiply through the roof?  Where was the plan for small business?  Where is it today?

“Local government are struggling to contain expenditure.  Rates need to be addressed, businesses cannot do it anymore.

“If commercial rates went in line with inflation – I would be paying 10 per cent more than six years ago.  I am paying 57 per cent more than six years ago.”

WA acting small business commissioner Jacky Finlayson said retailers paying higher payroll tax based on their total wages bill would likely be because they were employing more staff or paying higher wages.

“The payroll tax threshold commenced when the total wages bill exceeds $850,000 per annum or $70,833 per month. The current tax rate is 5.5 per cent, the tax threshold and rate have not increased since July 1 2016,” she said.

“The land tax costs can be passed from a property owner (landlord) to a tenant under the term of their lease as an outgoing or operating expense.

“Likewise, council rates can also be passed onto the tenant. Prior to entering into a lease, a landlord is required to disclose these costs to the tenant.

“It is important that small businesses consider these costs in their cashflow forecast and business planning.”

Ms Finlayson said the Small Business Development Commission often heard that managing cash flow, including operating expenses such as taxes and rent were challenges for small businesses that the .

City of Busselton chief executive officer Mike Archer said annual rate increases were a combination of local government fees and fees collected by the local government on behalf of other government agencies.

Mr Archer said rates were tied to Landgate property valuations which were outside local government influence.

“While some individual property owners may have seen rate increases around this mark over this time period, it is dependent on a number of variables including their individual property Landgate valuation,” he said.  

“Neither commercial rates or residential rates are aligned to the CPI.”   

Shadow Minister for small business Libby Mettam said WA was the only state to record a decrease in the seasonally adjusted retail trade, of 0.5 per cent against Increases in every other state.

Ms Mettam said the a national average increase was 0.4 per cent over the same period.

She said increased household fees and charges had impacted the retail sector given retail spend was clearly connected to the household budget and poor state figures.

“There is still much more work to do in increasing the payroll tax threshold and limiting the burden on business, given our small businesses now compete in a global market against companies that don’t have such costs.

“Obviously payroll tax is the worst type of tax, as it discourages productivity and business growth.”