STATE BUDGET 2006-2007: BUILDING ON THE BOOM - Cutting taxes

11/05/06
Measures in today's State Budget will save taxpayers $1.2billion over five years and ensure that Western Australia's tax levels remain competitive with other States.
Treasurer Eric Ripper said the tax relief measures would help drive future business investment in WA.
"The Carpenter Government is making decisions for tomorrow, not just for today," Mr Ripper said.
"Ensuring that our taxation levels remain competitive with other States will encourage future investment in WA.
"Thanks to four rounds of tax cuts, WA will continue to be a competitive economy, with tax as a percentage of GSP lower than the average for all other Australian States. In 2006-07, for WA the ratio is 4.1 per cent, below the States' average of 4.5 per cent."
Tax relief measures in the Budget include the abolition of stamp duty on mortgages, hiring transactions and non-real business property.
In addition, the Government is providing land tax and metropolitan region improvement tax relief worth about $37million a year through adjustments to the scales.
"The Government is providing further land tax relief, including raising the minimum threshold from $130,000 to $150,000 - freeing more than 17,000 taxpayers from land tax and addressing bracket creep," the Treasurer said.

The new scales will see the lowest threshold increase by $20,000 from $130,000 to $150,000, the second threshold increase by $100,000 from $290,000 to $390,000 and the third threshold increase by $125,000 from $750,000 to $875,000. Landholders above the upper thresholds will benefit from the cascading through of relief in the middle and lower levels.
"Total tax relief contained in this Budget is worth $117million in the 2006-07 year alone, increasing to $400million in 2010-2011 and totalling $1.2billion over five years," Mr Ripper said.
"When combined with other tax cuts announced since July 2004, the measures in this Budget will save taxpayers about $700million in 2006-07."
Other taxpayer-friendly measures in the 2006-07 State Budget include:

• a two-year land tax concession for people building new homes;
• providing land tax and rates relief for parents, grandparents or siblings who provide homes for relatives with disabilities;
• helping low-income earners purchase a home with stamp duty relief for further interest in shared equity housing; and
• encouraging property donations to charities by changing the liable party for duty on gifts from the donor to the recipient.

Mr Ripper said the decision to extend the land tax exemption for building new homes reflected the pressure the current boom is placing on the construction sector.
"Evidence from the real estate and building industries suggests it is taking more than 12 months to construct a home, due to high demand and skilled labour shortages," he said.
"Doubling the land tax concession to two years significantly reduces the risk of people incurring land tax bills while waiting for their new home to be built. Thousands of Western Australians will qualify for an exemption thanks to this change."
The Treasurer said providing land tax relief for Western Australians who had relatives with disabilities removed a disincentive for providing private accommodation for people with disabilities.
"Parents or certain other family members who provide an independent principal place of residence for relatives with disabilities are currently required to pay land tax on that property," he said.
Subsequent to its first term Business Tax Review, the Government is continuing to drive tax reform through its State Tax Review. The release of the State Tax Review Interim Report is expected to assist informed public debate on future tax relief.
Treasurer's office: 9222 8788