Page 4581 - Week 12 - Wednesday, 31 October 2018
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The amendment I have moved notes that there are now more than 2,000 additional businesses operating in Canberra than there were three years ago, and I understand that around 27½ thousand businesses have the territory as their main state of operation.
This has been a period of very significant growth in small to medium business in the territory. I do note that small and medium businesses in the ACT are, according to the latest Sensis business index, the most confident in Australia. This is because, according to Sensis, the ACT “leads the nation for sales and profitability, as well as prices”. Moreover, the ACT economy, our population and employment base continue to grow at above the national average which, combined, provides a supportive environment for local businesses. Economic growth, for example, is expected to come in as high as 4½ per cent for the last financial year. At 3.6 per cent, the ACT’s unemployment rate is the lowest in the country, and our through-the-year population growth was 2.1 per cent.
Members would be aware that the ACT government is transitioning the territory’s revenue base to make it fairer and more sustainable by phasing out inefficient taxes like stamp duty and insurance taxes and replacing this with revenue through the rates system. As a result of this tax reform program, the government has fully abolished stamp duty for all commercial property transactions under $1.5 million.
The very narrow set of examples that the Leader of the Opposition referred to in his remarks neglects the totality of state and territory taxes. The businesses that he referred to that would pay less in rates in New South Wales would pay more payroll tax, would pay insurance taxes and would pay large stamp duties on the acquisition of their commercial properties, which would have greater impacts on depressing property values, for example, and returns on investment than the ACT’s broad-based land tax system. Why? Because those taxes are more economically inefficient—those that are applied in New South Wales.
What is the evidence for this, aside from hundreds of years of tax theory and hundreds of years of economics? Just this week the Grattan Institute gave their report on the efficiency of state and territory tax systems. The ACT has the most efficient, in that we raise our revenue in ways that have the least impact on economic activity. And the state that raises their revenues in a way that has the most impact on economic activity is New South Wales. The New South Wales state government is responsible for levying the most inefficient taxes in the nation, and their impact on economic activity in their state is very significant compared to the ACT.
Mr Coe: The New South Wales government doesn’t do rates.
MR BARR: All the other taxes that you excluded from your analysis, Mr Coe.
Mr Coe: That’s my comparison.
MR BARR: My comparison is around all taxes paid by business, not just one form.
Mr Coe: For convenience.
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