Page 4111 - Week 13 - Wednesday, 18 November 2015
are exempt from payroll tax. Were they to move across the border to New South Wales they would be paying payroll tax if their payrolls were above the New South Wales threshold. And the differences between the ACT and New South Wales thresholds are very significant and growing. As I have flagged previously, the government will move the payroll tax-free threshold in the ACT to $2 million in next year’s budget.
Stamp duty will continue to be cut in each budget. I might add that there is a new dimension now to tax reform and to the pace of change on tax reform, and that is the proposition that the commonwealth have put forward in relation to the goods and services tax. It may well be that the Turnbull government will take an increase in the goods and services tax to the Australian people at the next federal election. As part of the offsetting measures for that increase in the goods and services tax, which I note has been modelled to be an impact of around $4,000 per year on the average household, in terms of extra tax being collected—to offset that extra tax increase—the commonwealth has floated a range of propositions including increased compensation through the social security system and income tax cuts but they have also floated assistance to the states and territories to abolish a number of these inefficient taxes.
There is a scenario where the federal government takes a GST increase to the next federal election and wins the support of the Australian community for that tax increase, with a series of offsetting tax measures. If the Australian people vote for an increase in the GST and the Australian Senate passes a package that includes other offsetting tax cuts and that those offsetting tax cuts include payments to the states and territories to abolish a range of inefficient state and territory taxes, then stamp duty may, in fact, be abolished in the ACT more quickly than the two decades that the government has proposed for reform of stamp duty.
If that is the outcome of the federal election—the Turnbull government seeks a mandate for a GST increase, provides a package of compensation and a series of measures to assist the states and territories to abolish various inefficient taxes and receives the support of the Australian Senate for such a change—then the ACT government would not use our intergovernmental powers to block such a reform if all of those preconditions were met. It is taken to an election, it passes the Senate and the compensation package includes a range of measures to abolish a range of state and territory taxes, appropriate compensation and various other offsetting tax measures—if that receives the support of the Australian people and of the Australian Senate—and the package also includes changes and assistance to the states and territories to reduce our inefficient taxes, then we would not stand in the way of that if all of those preconditions are met.
I am not sure that all of those preconditions will be met. I do not know yet whether the Turnbull government will take an increase to the GST to the people, I do not know yet what range of compensatory measures they would put in place, but we will enter into this process with a view to wanting to continue and, in fact, accelerate the pace of tax reform. And if the commonwealth are going to assist through that process, then we will work with them if they secure a democratic mandate and the support of the Australian Senate and all of those other preconditions are in place. That would enable us to, in fact, accelerate the pace of tax reform in the territory, and that would be a good outcome.