Page 2577 - Week 09 - Wednesday, 7 August 2013
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There would be a boost to economic growth, productivity and real per-person incomes if: Australia relied more on consumption and land taxes, and less on corporate and personal taxes, stamp duty, taxation of insurance, and payroll taxes in their current form.
Under the government’s reforms, inefficient taxes are being abolished, notably conveyance duty and the duty on insurance premiums. Since the commencement of the government’s taxation reform, the duty on general insurance premiums has reduced from 10 per cent to six per cent. Duty on life insurance premiums has been reduced from five per cent to three per cent. By 1 July 2016, this unfair and inefficient tax will have been completely abolished in the territory.
This will result in significant savings for Canberra households and for Canberra businesses. They will benefit as the government reduces tax on their insurance premiums, including on their building and contents premiums, motor vehicle premiums, professional indemnity premiums, public and product liability premiums and employers’ liability insurance policies.
The government is committed to abolishing conveyance duty. Stamp duty is an inefficient and distorting tax that acts as a barrier to the purchasing of properties by Canberrans, including first homebuyers who want to break into the market and people wishing to downsize into smaller properties.
The government has already released its schedule of conveyance duty rates until 2016-17. These rates provide significant savings to homebuyers. For example, the buyer of a $500,000 property is today saving $3,400 on stamp duty, compared to before the tax reform commenced, while the buyer of a $700,000 property receives a saving of around $4,900.
As part of the 2013-14 budget I also announced a new conveyance duty measure to benefit parties undertaking large property transactions in the territory. Large transactions valued above $1.65 million will now be subject to a flat rate of 5.5 per cent. This reform presents significant savings to local businesses. For example, a property valued at $4 million will receive a benefit through a reduction in conveyance duty of around $45½ thousand in 2013-14.
Fiscal responsibility dictates the revenue lost through the abolition of inefficient and unfair taxes must be recovered, and this will be achieved through the most progressive and broad-based taxation arrangement that we have available to us in the territory, our most efficient and our fairest tax base. This position is supported by the Business Council of Australia in their report released last week, which noted that state and territory governments need to raise revenue through their most efficient tax bases, such as consumption and land.
The government understands the importance of ensuring that general rates, though, remain affordable for all and that is why the rates rebate was significantly increased in the 2013-14 budget from $565 to $622. This increase helps offset the increase in general rates for those eligible for the concession.
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