Property levies on national tax agenda
Treasurer Joe Hockey is considering a plan for property levies and has urged the states to do the same.
The proposal from the Grattan Institute is part of the broad taxation reform agenda the commonwealth is discussing with states and territories.
The institute says the introduction of a modest property tax would provide the states with much-needed annual revenue of $7 billion and could even replace less efficient stamp duties if it was made larger. A broad property tax was considered – and rejected – by the South Australian Government during its tax review this year.
Hockey has hit out at some states for not keeping their side of the bargain by eliminating inefficient taxes when the GST was introduced 15 years ago.
But he continues to rule out making any changes to the GST without the unanimous agreement of state and territory governments and bipartisan support in the federal parliament.
“The silver bullet in tax reform is not increasing or broadening the GST, it’s about having a considered approach to the entire tax base,” he told ABC TV on Wednesday.
“If you were to increase the GST and the benefit went to the states, the commonwealth would have to find the money to compensate people.”
He will tell a tax reform forum in Melbourne later on Wednesday that before Australia heads any further down the track of reform to federal financial relations, there were still a number of states that had failed to abolish taxes they’d agreed to get rid of when the GST was introduced.
He singled out Labor-governed South Australia and ACT as two jurisdictions that were getting on with tax reform.
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The ACT is reducing stamp and insurance duties while increasing rates and other property taxes, broadly similar to the Grattan Institute proposal.
“This is the broad taxation reform agenda and we are considering it, we’re in discussions with the states,” Hockey said of these moves.
However, he noted that, like the GST, changing property taxes was ultimately a matter for the states – a point reiterated by the Prime Minister Tony Abbott today.
“What the states do is a matter for the states. We are in the business of cutting tax, not in the business of rising tax or shifting tax,” Abbott told reporters in Canberra.
– with AAP
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