Page 3396 - Week 11 - Wednesday, 14 November 2007
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change their behaviour in ways that are less preferable to them, on the basis of the government’s distortion of the market. The economic literature shows that it increases the distortionary cost or deadweight loss that results from such a tax, even when compared to a broader tax that generates the same amount of revenue. Those arguments indicate the economic inefficiency of taxes such as these.
There was a time when there were some questions as to whether the utilities tax was legal. Those questions seem to have been answered in the affirmative: while it was a bit dodgy, it was something that could be held to be legal. There are a number of cases on that. I note that that avenue has not been pursued—unlike the water abstraction charge, which could lead to a very interesting scenario if it is deemed to be illegal by the Federal Court, where it seems to be going—or is it the High Court? It will cause a number of problems for the government down the track should that tax be deemed to be illegal. This tax is certainly what you would class as a dodgy tax. The legality of it may no longer be in question, but there is still a lingering question which I do not think has been fully answered.
All in all, when one looks at this new tax, one sees that the minuses of it far outweigh the positives. I am amazed at this government—this government that cried poor, that made all these draconian changes as a result of the functional review which seems to have hit government some time after about 13 April 2006 and affected its decisions so greatly. This tax was introduced as a knee-jerk reaction, it would seem, along with some other quite strange draconian measures in that budget.
That includes things that still rankle greatly in our community and that are ongoing—like the closure of 23 government schools, which is still causing great angst in our community. Only recently, I received an email from a constituent saying, “Now that the government has all this extra money, why do they need to close Cook primary school?” Why indeed? It cost only $200,000.
The Chief Minister throws out arguments saying, “What would you cut if you got rid of this tax?” I could equally say, “Chief Minister, now you’ve got this extra money why haven’t you done X, Y and Z? Why, particularly, haven’t you revised your decision to close some of these school communities that quite clearly want to stay open and that cost very little in real terms to government?” It cuts both ways. Mr Mulcahy’s bill is worthy of support. (Time expired.)
MR PRATT (Brindabella) (5.09): Mr Mulcahy’s bill seeks to repeal an invasive tax. What better time to table this proposal, when we seem to have a generous windfall in the ACT? The Liberal Party is a party of lower taxes. We are a critical of the myriad unnecessary taxes which bedevil the ACT. We can only live in hope to see other invasive taxes which this government has been forced to introduce on the back of government mismanagement and waste lifted as well. We can only hope—and so does the community.
Unfortunately, when this government should be taking the opportunity to cut taxes as a consequence of stronger economic activity, and revenues flowing into the coffers, they are using the excuse of neglected programs to direct all funding into those government-neglected areas. In one sense, the opposition can hardly deny the need to
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