22 April 2005

Business had called on the States and Territories to remove all nine taxes listed in their GST funding agreement with the Federal Government.

Responding to the counter offer made yesterday by six States and Territories to Federal Treasurer, Peter Costello, the BCTR said the proposal short-changed the community. “It’s positive that some States and Territories have agreed to remove their high nuisance taxes” said John Stanhope, Chairman of the Business Coalition for Tax Reform.

“In doing so, they acknowledge that the GST was specifically introduced to replace inefficient taxes’, he said. “However, the States and Territories want the community to wait until 2011 when there is more than enough GST windfall to phase out these nuisance taxes over the next two years”.

The BCTR also condemned plans to remove stamp duty on commercial conveyances from the reform agreement. “It was the States and Territories that proposed the original list of nine taxes. “They chose the most inefficient indirect taxes to be replaced by the more efficient GST. ” Access Economics had shown that stamp duty on commercial conveyances is the least efficient of all the states and territories’ taxes. “The BCTR believes all nine taxes should be eliminated in line with increases in GST windfall and that this should happen now, not in the distant future.

“If the States and Territories were committed to long term tax reforms that result in economic growth they would extend the list of indirect taxes to be eliminated rather than cutting it back. “It’s time for all States and Territories, including NSW and WA, to commit to serious tax reform that provides direct benefits to the community. ”

The BCTR also called on the States and Territories to refresh their commitment not to reintroduce these, or similar taxes in the future. The States should not compound their revenue windfall by introducing new taxes or by raising other state taxes. The continued growth of GST revenue should be directed to further reform of state and territory taxes in the future.

The Business Coalition for Tax Reform (BCTR) is a forum for bringing together the views of the business community on tax reform issues. The BCTR aims to promote and improve Australia’s taxation system. While much has been achieved in recent years in the tax reform arena, the task is ongoing with much still to be done. The BCTR’s submission on State and Territory Taxes is available on the BCTR website on www.bctr.org

The members of the BCTR include Australian Food and Grocery Council, Australian Industry Group, Australian Institute of Company Directors, Australian Retailers Association, Australian Stock Exchange, Business Council of Australia, Corporate Tax Association of Australia, CPA Australia, Council of Small Business Organisations of Australia, Federal Chamber of Automotive Industries, International Banks & Securities Association Australia, Insurance Council of Australia, Investment and Financial Services Association, Master Builders Australia, Meetings Industry Association of Australia, Minerals Council of Australia, Property Council of Australia, Real Estate Institute of Australia and The Institute of Chartered Accountants in Australia.

Contacts:

John Stanhope, Chair, BCTR through Jane Sullivan General Manager Corporate Affairs Finance and Administration Telstra (03) 9632 3701.

Peter Verwer, Chair, BCTR State Taxes Committee (CEO, Property Council of Australia), 0407 463 842 (02) 9033 1926.

Peter Burn, Chair, BCTR Tax Administration Committee (Associate Director: Public Policy, Australian Industry Group), 0418 104 030 (02) 9466 5503