Hon Christian Porter BA(Hons) BEc LLB(UWA) MSc(Dist)(LSE) MLA

Hon Christian Porter BA(Hons) BEc LLB(UWA) MSc(Dist)(LSE) MLA

Former Treasurer; Attorney General

    Federal tax reform paper disappointing and unimaginative

    29/07/2011 12:00 AM
    Western Australian Treasurer Christian Porter said he was disappointed the Federal Government was not prepared to discuss its proposed Minerals Resource Rent Tax and Carbon Tax at its October Tax Forum.

    Following yesterday’s release by the Federal Government of a Discussion Paper (Tax Reform - Next Steps for Australia), Mr Porter re-emphasised WA’s opposition to both taxes.

    The Treasurer said the forum provided an ideal opportunity for the taxes to be properly evaluated in the context of broader tax reform.

    “These taxes have added uncertainty to many of the State’s industries already challenged by the rising Australian dollar and the growing risks in a volatile global economy,” he said.

    “The present tax arrangements and revenue distribution existing in Australia do not serve the national interest particularly well at all.

    “Surely with a serious commitment to reform we can do better than a system that leaves the major delivery engines of the high cost services - the States - with taxes like payroll taxes which are far from efficient ways to deliver revenue.

    “The discussion paper is neither bold nor imaginative, which is disappointing coming from a Federal Government that talks constantly about economic reform.”

    Mr Porter said the discussion paper noted the Federal Government’s commitment to deliver a review into the distribution of GST revenue among the States and Territories by 2012, which was welcomed by WA.

    “Based on the current Grants Commission methodology, Western Australia’s GST share is projected to fall to just 33 per cent of our population share by 2014-15, which is not only inequitable, but will starve the State of the necessary funds to support further economic development for the benefit of the entire nation,” he said.

    “The inequity is even more obvious when you consider that WA contributes about $14billion per year, or $6,000 per Western Australian, more to the Commonwealth Budget, including through Commonwealth taxes such as company tax and personal income tax, than it receives back in Commonwealth grants and direct Commonwealth spending.

    “A return of some of that $6,000 would go a long way to helping West Australians who are struggling with rising electricity and water costs, which are largely driven by the need to invest in the infrastructure to keep this State growing.”

    The Treasurer said the discussion paper also included options for State taxes and potential reform, which he said needed to at least maintain or ideally improve fiscal autonomy and flexibility of the States.

    “We acknowledge that some State taxes are not ideal and welcome the opportunity to review those taxes, but we are also keenly aware that we have very limited options available to us to raise revenue to pay for the services that West Australians expect,” he said. 

    “Any fundamental State tax reform will require significant co-operation and support from the Federal Government. 

    “For example, in our submission to the Henry Review, we raised several ideas to reform State taxes, including some that involved replacing current State taxes with a share of Commonwealth tax bases. 

    “This would also ensure that the States retained control over as much of their revenues as possible so we do not become even more dependent on the Commonwealth.

     “We are also very interested in reforms to Commonwealth taxes, including those that could help attract and retain workers in mining regions where there is a great need for skilled labour. 

    “I have previously indicated that we would like to see an increase in the Commonwealth’s income tax zone rebate to provide real incentives for workers to relocate to remote areas in the State.

    “Another area in which we would like to see some action is the provision of incentives for mining exploration.  Despite increasing commodity prices, the overall level of exploration has been lower in recent years than in the past and something needs to be done to address this situation to secure our citizens prosperity into the future.”

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