Page 852 - Week 03 - Thursday, 30 March 2006
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that are going to cost the taxpayer a lot of money, because things are in a parlous state and it would be reckless of me to not pay regard to the position they have got themselves into.
The saving of $2 million to business from this bill, leading ultimately to $19 million by the fiscal year 2010-11, can also be looked at as revenue forgone by the government. But that loss from the government’s perspective must be seen against GST revenue estimated to be $863 million in 2006-07. It is quite interesting that over the five years to 2008-09 GST payments are estimated to run at least $60 million per year greater than if there had been no tax reform, so the government is clearly a net beneficiary from tax reform.
I do not think the message is very well understood out there. I do not think my colleagues on the hill have done the greatest job in marketing the GST for just what a massive windfall it has been and how it has helped the ACT by these taxes being delivered back to the territory. It is just regrettable that, instead of taking advantage of this windfall, this government’s view has just been to spend more. The federal government are quite correct in asking state and territory treasurers to meet their side of the bargain by reducing state taxes in return for receiving GST payments. Quite frankly, I think people are right to be upset with aspects of this whole deal. The GST came in and we understood this was going to see the end of a raft of these state taxes. Yes, some have gone, and some will eventually go and many will stay. But the sentiment and the understanding of the people of Australia when this new system of tax was developed were certainly much different from what we have finally seen.
It seems that many of the state governments have taken a view that this extra money that has come in is simply there to be spent on all sorts of interesting initiatives. I do not have an issue with seeing substantial funds going into health and education—these critical areas of service need—and aged care and the like. But, when I see the monument-building concepts start to creep into territory and state government practices because all of this money that has been coming in, I am concerned.
There are other taxes, apart from those listed, that could be reduced or abolished, such as payroll tax, duties on general insurance and life insurance and duty on motor vehicle registration. The duty on motor vehicle registration probably seems a small thing to some in this place, but in fact it is one of those real irritants for people. Before the 2004 election I looked at similar duty in every other state in Australia and realised that we are absolutely getting slugged in the ACT; we are up there with the parlous New South Wales situation where people are taxed to the hilt. The ACT sits alongside New South Wales as one of the highest taxing places in the country.
There is room to do more because the states and territories are receiving far more from GST revenue than they expected. They have been the big winners. The former ACT Treasurer said that abolishing the taxes to be reviewed under the IGA—and am quoting him from the Canberra Times on 24 March last year—“would cripple the territory’s economy”. But what he meant was that the government had foolishly spent a lot of the windfall revenue of the past four years and had nowhere to go. I understood his frustration, and that was the real message in that public comment. The Chief Minister will probably see those windfall years as the budget being saved by good luck. He made that reference only the other day—that it was more good luck than good management
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