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Legislative Assembly for the ACT: 2001 Week 10 Hansard (30 August) . . Page.. 3760 ..

MR HUMPHRIES (continuing):

I have been advised by the ACT Treasury that the main reason for the Auditor-General's opinion is that no attempt has been made by the department to measure the size of any possible revenue leakage. The view put forward in that is that somehow a failure to measure the size of any leakage indicates either that there is no concern about the amount of leakage or that the department does not want to look because it might be shocked by the answer. The better response to that concern is that an exercise to determine the leakage would involve very significant resources over a 12-month period and, even then, would be most unlikely to result in a reliable or accurate method of estimating the leakage of payroll tax.

The compliance methods to ensure that payable revenue has been collected efficiently and effectively have been addressed by other taxing authorities throughout Australia, where it is recognised that better compliance results are achieved through data matching processes and case selection based on prior experience. The ACT Revenue Office has been adopting these well-proven compliance measures for payroll tax.

When the Labor government handed down its last budget in June 1994, the payroll tax threshold was $550,000, the rate was 7 per cent and the amount collected was $100.6 million. Since being in office, this government has steadily increased the payroll tax threshold from $550,000 to $900,000 last year, to $11/4 million this year and will increase it to $1.5 million next year. We also reduced the rate from 7 per cent in June 1994 to 6.85 per cent in July 1996. Against this reduction in the payroll tax net-the amount we collect from each employer-the amount we have collected in total in payroll tax has risen to $155 million.

Even taking into account the increases in average weekly earnings of 29 per cent over this period, payroll tax collections have increased by 54 per cent. That is even after you have taken into account the reduction in the amount being collected from each employer. The figures indicate that the increase in collections is greater than the general increase in earnings on which the tax is based, even though all aspects of the tax burden have been reduced. There has been a marked improvement in payroll tax administration since this government has been in office.

We have undertaken to further investigate the suggestions for improved methods made by the Auditor-General in his report. I believe the method of collection is satisfactory. There is some room for change at the fringes but, overall, I am satisfied that the amount collected is appropriate to the amount of effort put in. With a very intensive additional resource placed into the Department of Treasury for compliance, it may be possible to collect some more. The question is whether the extra amount collected would be more than the amount spent to make that level of compliance possible.

MR QUINLAN: Payroll tax has increased through federal government outsourcing, so we won't bother looking at it. You mentioned in your answer-

Mr Moore: That was a preamble.

MR QUINLAN: It is part of the extension of the question. In his answer, the Chief Minister referred to collections exceeding target. You are aware that this report criticises the way the target is set. I quote:

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