Page 428 - Week 02 - Tuesday, 15 February 2005
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shared by his colleagues, of how damaging to investment, economic growth and employment some of these taxes can be.
The key argument in favour of the goods and services tax under a new tax system was that it would allow for the removal of a raft of inefficient taxes which raised little revenue, suppressed investment, reduced trade and incurred high compliance costs. In 2000, when the GST was introduced, all governments in Australia agreed to make a start on getting rid of these taxes. Sadly, progress has been rather slow. From 1 July 2000 wholesale sales tax on petroleum, liquor and tobacco was abolished. Bed taxes were also abolished in both Sydney and the Northern Territory. From 1 July 2001 financial institutions duty and stamp duties on marketable securities were abolished.
The Financial Institutions Duty Act has remained in force to provide for the lodgement of late returns and assessment of liability discovered after that date. The FID Act is now redundant; so it is being repealed in this bill. Ministers also agreed to abolish debits tax from 1 July 2005. However, the Debits Tax Act will continue until 1 July 2006 to allow for the collection of tax incurred but not paid before 1 July 2005, and this bill gives effect to that agreement.
Several taxes remain, however, including taxes on hiring arrangements, leases, mortgages, life insurance, business acquisitions, cheques, bills of exchange and unquotable marketable securities. These taxes must eventually be eliminated.
I pointed out, Mr Speaker, last December that ACT taxpayers should be better off by more than $240 million in the next four years as a result of replacing the raft of job-destroying taxes and the old grants scheme within the goods and services tax under the intergovernmental arrangement. Indeed, the commonwealth government’s mid-year economic and fiscal outlook found that the ACT would be better off by almost $250 million over the next four years due to the combined effect of GST payments and national competition payments.
Without doubt there has been a windfall gain in GST collections which can be used, sensibly, to deliver tax reductions to the people of the ACT, and that is why the Liberal opposition, as part of its election commitments in 2004, promised to cut eight taxes, thereby removing some $25 million per year from the burden carried by business and individuals in the ACT. Such taxes included debits tax, duty on certain marketable securities, duty on hiring arrangements, duty on leases and reductions in payroll tax—a most harmful tax in terms of the impact on employment and job creation in the territory. The revenue forgone would be more than offset by GST payments and the boost to activity on the part of business and individuals. There would also be new opportunities created in a less restrictive economic climate. Obviously, fewer taxes mean more funds available for investment and job creation.
It is disappointing to read the document tabled today, which was the budget mid-year review. I might quote from it. It reports that the abolition of the IGA taxes will be discussed at the Treasurers Conference in March 2005 with the federal Treasurer who is likely to seek state agreement to a program of rolling tax reform over the four years. I had the opportunity to meet with the federal Treasurer briefly yesterday. Those initiatives will deliver great benefits to the Australian people.
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