Page 4164 - Week 13 - Thursday, 14 December 2006
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The bill is important to implement one of the revenue measures that will enable the government to continue to deliver the important services that the community expects and demands. The owners of utility network facilities enjoy a privileged position in that they are given substantial access to land and of use of that land in the ACT for little charge or, in most instances, no charge. This tax will go some small way towards recognising the benefits accruing to owners of utility infrastructure from being able to run their networks through the territory. Of course, in most cases this charge will be reflected in the prices charged to users of the network for the services they deliver, which will better reflect the true cost of delivering those services.
As a tax law the bill has the support of the Taxation Administration Act. Section 139 of that act provides for the tax rate to be determined by disallowed instrument. The tax rate will be a single rate applicable to all utility networks. Various questions have been asked about the litigation experienced in other jurisdictions when some local government councils attempted to charge telecommunications companies for their installations on council land. This bill addresses that issue by not discriminating against any utilities. All are treated the same under the provisions of the bill.
The option exists for utilities to pass the cost of this tax on to customers, subject to regulatory and commercial considerations. The moderate level of the tax means that the average cost to each customer is less than $100 per annum. The government recognises the need to reduce the impact on pensioners and Department of Veterans’ Affairs gold cardholders. Consequently, increased funding has been provided for pensioner rebates on energy, water and sewerage bills. The government is also concerned to minimise the compliance burden on utility owners. In that context, we are inviting, and indeed encouraging, owners of utility networks to propose to us the least onerous but best possible measurement method for the approval of the Commissioner for ACT Revenue.
In response to Dr Foskey’s proposal that the tax should be reworked to have a more progressive social impact, firstly I say by way of clarification that a progressive tax is one where taxpayers earning higher income pay a higher proportion of that income in tax relative to the lower income earners. While this may be a desirable target, the complexity of its application makes it practically impossible in some situations, including situations such as this. To effectively redistribute the cost between high and low income earners would require that utility owners take on that burden. Clearly, the complexity of such a system would make it impracticable.
As I have mentioned before, the cost to customers is expected to be less than $100 a year. I suggest that the cost of administration required in redistributing the costs among consumers, even if there were a sound basis for doing so, would outweigh the benefits. Of more importance are the other methods the government has implemented to assist lower income earners and others who have need of assistance from time to time. Specifically, the government provides rebates for pensioners and Department of Veterans’ Affairs gold cardholders, and pensioners and other concession cardholders are exempt from the ambulance levy.
Dr Foskey is suggesting that the tax be progressive by varying the rate according to the utilities service. I advise that that is not an option because of provisions in the
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