Page 2111 - Week 06 - Tuesday, 8 May 2012
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The review recommended abolishing a number of transaction taxes because these taxes are inefficient. The government agrees with this. We are committed to phasing out transaction taxes, but we recognise the need to undertake such a phase-out over time to ensure equity, fairness and budget sustainability.
The review also recommended that the rates base be made more progressive. The government agrees with this recommendation. Currently the high fixed charge and the flat tax rate are regressive on those with lower land values. A reformed system of general rates would represent an efficient and stable revenue base.
To smooth the transition and to ease the impact on households, the government will examine the range of concessions it provides to Canberrans. It will include, but not be limited to, concessions such as the deferral of duty, as well as pensioner and home buyer concession schemes.
The government have noted the recommendations in relation to the increase in gaming tax, but have been clear that we will defer any consideration of these matters until national reform agendas, particularly in relation to the mandatory pre-commitment trial within the territory, have finished. It would be unfair, in our view, to change tax settings while that trial is underway.
MR SPEAKER: A supplementary, Ms Porter.
MS PORTER: Treasurer, what are the government’s guiding principles in undertaking tax reform?
MR BARR: The underlying principles and values that the government will bring to this reform task are about a fairer tax system, a simpler tax system and a more efficient tax system. So fairer, simpler and more efficient: these are the principles and the values that the government will bring to this reform task. We will undertake this reform task over time to allow for an appropriate transition.
To make our system fairer we believe the tax base needs to become more progressive. We also believe that the prudent use of concessions can help in this goal. This way the government can ensure that the tax burden is lessened for low and middle-income Canberra households.
To make our system simpler we support the reduction and eventual abolition of a number of taxes. In the short term we have announced a cut in payroll tax to assist Canberra businesses. Around 115 Canberra businesses will be excluded from paying the tax and a further 1,865 businesses in the territory will receive a tax cut—something that I am sure will be welcomed by those opposite.
There is no doubt that reform is difficult but it is necessary, and an appropriate transition time is required. The tax review recommends this and the government agrees. But as with all of the public policy challenges that are before us, people’s initial responses are interesting. I welcome the supportive statements of Ms Hunter, who is interested in policy reform, and I note the usual carping negativity of those
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