Page 3408 - Week 11 - Tuesday, 14 November 2006
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liability on commercial hiring businesses to pay duty on the total amount of new and existing hiring charges. This will affect the hiring of goods and services such as videos, storage space and heavy equipment. Secondly, it amends chapter 5 of the Duties Act 1999 to expire on 30 June 2009, which will abolish duty on all leases executed after that date. It will, however, retain the duty payable on long-term leases and franchise arrangements that are longer than 30 years, which are still considered as conveyances, to protect the territory’s land revenue base. Finally, it amends chapter 3 of the Duties Act of 1999 to abolish duties on unquoted marketable securities—that is, securities that are not quoted on a stock exchange—made after 30 June 2010. This includes the transfer of shares and units in a unit trust scheme, and follows similar amendments that have already been made to marketable securities that are quoted on a stock exchange.
This bill follows previous legislation that passed in 2001, 2005 and earlier this year abolishing the financial institutions duty, duty on quoted marketable securities, the debits tax and duty on non-real core assets. This bill, however, is expected to affect a broader number of taxpayers whose expectations may differ in relation to how the removal of these duties will impact the local ACT economy. This is partly why the abolition dates for these duties have been spread through to 2010 and why transitional provisions have been included in the bill to ensure that businesses and individuals are properly informed of the changes.
Individual taxpayers and consumers should benefit from the abolition of these duties—and the opposition welcomes these reforms—through lower prices for hiring a range of goods and services. However, this benefit is largely dependent on businesses volunteering to pass on this duty relief to consumers. Businesses will also obviously benefit through the abolition of these duties, particularly those currently affected by the duty on unquoted marketable securities. As this affects the duty on the value of assets as well as the value of shares, it is expected to have the greatest impact among the three duties which are being abolished by this bill.
It should be noted that the abolition of the lease duty in July 2009 will make the ACT the last Australian jurisdiction to do so. Likewise, the abolition of the duty on unquoted marketable securities by the ACT in July 2010 will make it equal last with South Australia in carrying out its obligations under the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations. Sadly, this is symptomatic of the government’s reluctance to fully embrace the spirit of the intergovernmental agreement. I would suggest, Mr Speaker, that the Treasurer of this government has taken only a literal interpretation of the ACT’s agreement with the Australian government in reducing only specific taxes and charges. There has been, however, a disappointing failure to adhere to the more important spirit of the agreement that committed to reducing the overall tax burden on Canberrans. This government cannot have the GST cake and eat it too—that is, the ACT cannot take and spend its GST revenue windfall on expanding the public service and pursuing indulgent capital projects while at the same time expanding its existing tax structure through measures such as the fire and emergency services levy and the water abstraction charge.
In terms of the more specific revenue implications of this bill, it is estimated that the cumulative revenue forgone to 2011 through the abolition of these three duties is $27.8 million. Indeed, part of the reason why the three abolition dates have been
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