Page 4618 - Week 16 - Tuesday, 27 November 1990
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MR KAINE (Chief Minister) (8.14): Mr Speaker, there are a couple of things that I would like to say about this Bill. Needless to say, I support it. I think it is worthwhile saying something about why it was necessary for the Government to increase this particular levy. Those opposite, if they ever understood it, may have forgotten the fact that at the Premiers Conference last year - I am sorry, this year it was - - -
Mr Berry: Get the year right.
MR KAINE: If you listen you might get the facts; but your ears no doubt will flap, as usual.
It was put to the Commonwealth that they should hand this tax, and the BAD tax, over to the States. The Commonwealth declined to do so. Some short time afterwards, however, they decided to vacate the BAD tax. This was after all of the States and the Territories had compiled their budgets, so that it was too late for the States to pick up that taxation and impose it to raise the same amount of revenue as had formerly been collected by the Commonwealth. So the States and the Territories were in a rather difficult situation.
At the same time as vacating the BAD tax field, the Commonwealth simply advised us that they were going to reduce our base by an amount equivalent to the BAD tax collection. What that meant for us was that, quite out of the blue, we were told that on a full year basis our revenue from the Commonwealth was simply going to decrease by approximately $5m.
The original proposition after that was that the States and Territories would agree simply to reimpose the BAD tax, allow the Commonwealth to collect it and our tax base would, therefore, remain unchanged. Unfortunately the States and the Territories could not agree on that. So, in the end, this Government had to make its own decision about how it was going to cover the $5m a year shortfall.
We determined, on balance, that the best way to do that was to increase the FID. I should make the comment that this is not a regressive tax. If a person at the lower end of the income scale transacts few accounts at their bank, then they attract very little FID charge. If, on the other hand, those of us who are more affluent transact an increasing number of transactions, we attract an increasing rate of tax.
It is a fair tax in terms of its burden on the individual. That needs to be noted. Any implication that somehow it is an unfair or unreasonable tax needs to be set aside. It needs to be made clear that this decision was forced on us by the Commonwealth, which was ambivalent about its approach to this matter and left us in a situation of having to recoup taxes in some other way.
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