Page 180 - Week 01 - Wednesday, 17 February 1993
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MS FOLLETT (Chief Minister and Treasurer) (4.07), in reply: I thank Mr De Domenico for his indication that the Opposition will be supporting this Bill. It is an important Bill in looking at fair and equitable taxing in the ACT, and I would like to revisit for a moment the intention of the legislation before us. The Bill gives effect to a government commitment that employment agents in all industries will be given exemption from the payment of payroll tax similar to that which is available under section 3B of the Payroll Tax Act 1987 to other employers in respect of payments they make to independent contractors engaged through agency arrangements. So it is a specific arrangement. This Bill would have no significant revenue implications. As I said, the purpose of it is to ensure a fair and equitable taxing regime in the Territory.
It also introduces some new provisions in relation to binding the Crown, as Mr De Domenico has pointed out. Currently the Act applies to wages paid by public authorities of the Territory other than wages paid out of Consolidated Revenue. The proposals in this Bill will allow the taxation of the Crown in right of the ACT and the States and the Northern Territory which conduct activities of a commercial nature and earn income from business-type operations in our Territory. I think that is only fair. The Bill continues to exempt departmental wages and salaries but it does introduce a mechanism to allow for the payment of payroll tax by nominated government business enterprises operating from within the Territory public account. The taxing of activities undertaken by sections of the Government which are conducted along business lines is seen as a natural progression of the policy of imposing taxes on ACT public authorities. This proposal is expected to realise a small increase in payroll tax of the order of $550,000 in its first year. That is the purpose of the Bill that is before us.
Mr De Domenico made a number of general debating points about payroll tax as a tax, and I would like to comment on a couple of the issues. First of all, he quoted some recent Premiers, notably Dr Lawrence, who was speaking about payroll tax and regretting the fact that the States had to rely upon what she saw as a narrow and regressive tax. I believe that that view put forward by Dr Lawrence would be quite widely shared. It is not a view that I have any problem with at all. The view was put forward in the particular context, though, that all of the States were attempting to get from the Federal Government a greater share of the Federal Government's income tax raising capacity.
The irony now is that the Liberal States, by agreeing to Dr Hewson's proposal on the abolition of payroll tax, have agreed to hand over to the Commonwealth a much more significant share of their revenue raising capacity. In the case of the ACT, the abolition of payroll tax and the subsequent compensation by the Federal Government through the general revenue grants process would move us from about a 50:50 situation of own revenue and Commonwealth grants to a 40:60 situation, where we were raising only about 40 per cent of our own revenue and were reliant on the Commonwealth to the extent of 60 per cent. If members cast their minds back, they will recall that that was at the time a very controversial issue put forward by Mr Greiner, Dr Lawrence, Mrs Kirner - any number of Premiers - and it seems ironic that, without a backward glance, the Liberal States have done a complete backflip on what is a relatively recent argument.
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