Page 1598 - Week 06 - Thursday, 7 June 2007
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .
money year in, year out and seems never to learn the lessons. That raises various questions about the approaches being taken in relation to budget planning.
One thing is certainly clear, that is, that this budget locks in and continues the massive tax increases on ACT businesses and families. There is no hint of any relief. Before the budget was released, Mr Stanhope told the ABC that the budget would not include a repeat of last year’s tax increases. What he did not say was that the ACT government had already committed itself to a system of automatic increases in general rates according to the wage price index. In 2007-08, taxes will rise by 4.8 per cent to $924 million, an extra $42 million in tax compared to the current financial year. Of course, overall revenues will, in fact, go up seven per cent next year.
Among these taxes will be the following increases: payroll tax will rise by nine per cent to $239 million; land tax will rise by 14 per cent to $72.4 million; general insurance duty will rise by four per cent to $35 million; and the fire and emergency services levy will rise by six per cent to $21.7 million. I will talk about this levy in greater detail in a moment. The infamous utilities tax on people’s home phones, internet services, and gas and power will rise to $16.5 million and traffic fines will rise by 44 per cent to $20.4 million.
Especially insidious is the government’s policy of indexing to WPI, which ensures continuing increases at a level approximately 60 per cent higher than inflation. That is taxation by stealth, and unsurprisingly the Chief Minister sees no reason to disclose these increases in taxation in media interviews. The budget shows that the government does not have a plan to reduce its costs. It will simply continue to take more money from the pockets of ACT residents. No thought is given to people who may not be able to keep up with the WPI: the pensioners, the unemployed, self-funded retirees, contractors and many business owners. These people will all suffer a fall in living standards. I find it remarkable that the Greens have not seized on that, given their claims to represent this constituency in particular.
The fire and emergency services levy provides an example of how little the ACT government adheres to the principles of good taxation. Of course, one wonders what taxation is particularly good, but there are principles there to determine what is deemed by economists as good taxation. On those principles, the fire and emergency services levy is, in fact, a bad tax. It was introduced in 2006-07 and is charged on all rateable properties in the ACT. The fire and emergency services levy breaks the basic principles of taxation. It has a discriminatory effect on the property sector. There is a marked disparity between who pays, how much and their level of service, and there is poor accountability on how and where the services are delivered and at what cost.
The beneficiaries of fire and emergency services are widespread throughout the community: businesses, insurance companies, governments and the environment. Fire services have the characteristics of a public good in that consumption by one user does not reduce the demand by other users and users cannot be excluded from the service. It follows that there should be a return to funding emergency services from consolidated revenue.
In relation to the budget outcome, ACT residents are being hit to allow the government to achieve a modest budget surplus in 2007-08, but this surplus is small
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .