SA - the new NSW

[Jimmy_041]

State taxes hit growth and jobs

Christian Kerr
From: The Australian December 29, 2009 12:00AM

SOUTH Australia has eclipsed NSW as the nation's highest-taxing jurisdiction for business.

And state taxes are frustrating federal infrastructure plans and impeding job creation.

A report on business taxes by the Institute of Public Affairs shows that Queensland continues to slide in its taxation competitiveness - pushed into third place by an ever more competitive Victoria - while Western Australia has the lowest tax regime.

It concludes that the states are working against federal government policies by making infrastructure-related firms in the construction and transport sectors the most heavily taxed companies.

Small businesses, a major driver of employment and economic development, are also disproportionately heavily taxed by state regimes.

The report warns of a lack of information and transparency that helps business understand potential liabilities and encourages competition among the states.

But it shows there is significant variation in the tax mix between states, providing opportunities for business to set up operations where tax structures are best suited to their particular needs.

The level of tax imposed on businesses also differs significantly according to industry and business size.

The report's author, IPA research fellow Julie Novak, said tax reform should be a priority for all governments in the current low-growth economic environment.

"It is even more important in an economic climate where wasteful fiscal stimulus programs will act as a drag on future productivity growth," she said yesterday.

"State business taxes are widely held to impede efficiency, constrain business growth and reduce export opportunities.

"Lower taxes encourage private-sector investment and growth."

She said Western Australia was "in the box seat by maintaining the lowest taxes for the second year in a row".

Western Australia's business taxes are about 5 per cent lower than the national average.

In contrast, South Australia's are about 5 per cent above average and more than 10 per cent higher than inWA.

The figures will come as a major embarrassment to SA Premier Mike Rann, the nation's longest-serving leader, just 12 weeks shy of a state election.

They come less than a fortnight after Mr Rann's previously impregnable position was rocked by a Newspoll showing that new Liberal leader Isobel Redmond had slashed Labor's lead in two.

Ms Novak said an onerous property-taxation regime had played a major role in driving South Australia's disappointing result.

"This is on top of an underperforming state economy, and a projected budget deficit for this year due to weak expenditure controls," she said.

Ms Novak warned that Australian state taxes had long been the target of sharp criticism for their inefficiency.

She pointed to research from the Centre for International Economics in Canberra, which found that reductions in state land tax, the removal of insurance duties and stamp duty on property would boost gross domestic product by 1.7 per cent, and work by Access Economics, which found state stamp duties on motor vehicles, insurance and non-residential property were among the least-efficient taxes.

"A number of studies have also suggested that state taxes, in particular payroll tax, may discourage some firms from expanding their size," Ms Novak added.

"Transaction-based business taxes at the state level with relatively low thresholds disproportionately affect smaller businesses.

"This affects their capacity to acquire capital, labour and materials to expand.

"At the other end of the scale, larger businesses are also adversely affected by state business taxation," she said.

"In general terms, larger businesses tend to employ large numbers of people and invest significant amounts of capital in an attempt to exploit economies of scale and scope.

"State taxes can have often deleterious consequences, at least at the margin, for further expansion of existing firms."

[Jimmy_041]

Bannon's vision condemned to dreams

The Australian December 29, 2009

BACK in the 1980s, Labor premier John Bannon imagined a low-tax South Australia siphoning away rivers of business investment dollars from the eastern states.

It was a small dream that spawned the bold but catastrophic plan to massively expand the role of the State Bank of SA.

Bannon saw a banking powerhouse generating huge profits that would pay for lower taxes, thus guaranteeing South Australia's future prosperity. As history shows, that mouse never roared. The bank made a series of reckless investments and eventually fell, leaving South Australian taxpayers on the hook for billions.

They threw out Bannon at the first opportunity and today he remains a pariah in the state he ruled for a decade.

The revelation that South Australia is now the country's highest taxing state for business amounts to the wheel coming full circle.

Bannon's original fear before setting off on the State Bank debacle - that South Australia's natural disadvantages would inevitably put upwards pressure on the state's tax base - is now clearly reality.

For Premier Mike Rann, who worked as Bannon's press secretary and entered parliament under his stewardship, the Institute of Public Affairs findings are hardly welcome with an election just 12 weeks away. In recent months, Rann's government has been rocked by allegations of sexual impropriety by him and the bizarre pleadings of supposedly hard-nut Treasurer Kevin Foley for love and understanding. Since then, new Opposition Leader Isobel Redmond has halved the government's lead in Newspoll to six points. That, and Newspoll's finding of a decline in Labor's primary vote, have given Redmond the sniff of a surprise victory in March. Having fresh ammunition to brand Rann as a big taxer is another lucky break that will further assist her chances.

The IPA report reinforces the most recent Grants Commission finding that South Australia levies its tax base more savagely than any other state. The chairman of the commission is Alan Morris. His next report in February will be much anticipated.

Also pending is the government's overdue mid-year budget review. It will tell both parties how much is in the kitty to fund election promises. If, as expected, revenues are above the estimates, both sides will have room to offer tax cuts in the election campaign.

If the IPA report is a guide, land tax is clearly the most pressing issue. According to the IPA, South Australian land tax is 69 per cent higher than the states average and a massive 536 per cent higher than Western Australia's.

Hurting the most are people in small business, a vital constituency whose members can be found these days making grim jokes about receiving land tax notices every time they go to the post office.

[Gozu]

Institute of Public Affairs

"The IPA was founded in the early 1940s, partly in response to the collapse of Australia's main conservative party, the United Australia Party. The IPA was one of a number of groups which came together to form the Liberal Party of Australia, and was, for many years, primarily a fundraising conduit for the Liberal Party, particularly in Victoria, [1]. The IPA returned to prominence as a thinktank in the 1990s, following a merger with the Australian Institute of Public Policy, headed by John Hyde who became Executive Director."

"It is funded by its membership which include businesses. Among these businesses are ExxonMobil,[1] Telstra, Western Mining, BHP Billiton, Phillip Morris,[2] Gunns Limited, Monsanto Company,[3] Murray Irrigation Limited,[4] and Visy Industries."

"The IPA advocates right-wing economic policies such as privatisation and deregulation of state-owned enterprises, trade liberalisation and deregulated workplaces, climate change skepticism (through its environmental subsidiary the Australian Environment Foundation), and the accountability of non-government organisations (NGOs).[citation needed] In its own words, the Institute believes in "the free market of ideas, the free flow of capital, a limited and efficient government, the rule of law, and representative democracy."[6]"

"The IPA is highly critical of scientific research on the dangers of passive smoking, describing a major report of the National Health and Medical Research Council as "incoherent", "corrupt" and "incompetent""Smokescreen: 'Passive Smoking' and Public Policy | Institute of Public Affairs Australia". http://www.ipa.org.au/publications/523/ ... lic-policy.

"The IPA adopts a position of climate change scepticism.[12] It promotes the views of two prominent Australian climate change sceptics, Bob Carter and Ian Plimer. The IPA supports elements of climate change science, including some link between the use of fossil fuels and rising carbon dioxide levels, however it also disagrees with certain aspects of climate theories[citation needed]. Jennifer Marohasy supports the view that many environmental issues, including climate change, are exaggerated, and that green groups promote solutions that ultimately do not benefit society.[13]

In 2008, the institute facilitated a donation of $350,000 by Dr G. Bryant Macfie, a climate change sceptic, to the University of Queensland for environmental research. The money is to fund three environmental doctoral projects, with the IPA suggesting two of the three agreed topics.[14] George Bryant Macfie is a top 20 shareholder in Strike Resources Limited.[2][3]"

"With the demise of the Howard Government, the Institute has played a significant role in generating intellectual analysis and criticism of the Rudd Government's policies."

http://en.wikipedia.org/wiki/Institute_ ... ic_Affairs

[Gozu]

"Surging Australian economy continues to attract skilled migrants":

Thursday, September 24th, 2009

"A key indicator shows South Australia has soared ahead in economic growth, in comparison to other States. Household, business and government spending all defied the downturn and recorded strong growth in the past financial year, the ABS found. While some other states have been hit hard, SA has been opening new mines, such as the Angas zinc mine at Strathalbyn, and creating a robust economy, with 1.3 per cent growth in the quarter and 5.2 per cent over the year."

“This is actually a pretty good result,” Prescott Securities chief economist Darryl Gobbett said.

"State figures in the GDP data show a seasonally adjusted annual increase of 5.2 per cent in SA, compared with a 2.5 per cent increase in WA, 1.5 per cent in Victoria and 0.8 per cent in NSW. Queensland went backwards at negative 2.5 per cent. The indicator measures what was spent by households, business and government, on both consumption and capital investment."

“SA has come through this downturn pretty well,” Mr Gobbett said."

"He noted the growth was widespread, with household and government spending “a bit stronger than we’ve seen nationally”. “The other thing is what’s happening in the housing sector – construction is doing quite nicely. And business investment has held up.” Mr Gobbett said in the next two years the air warfare destroyer project, the expansion of Olympic Dam and potentially a good grain crop would lift SA further. “We could well see good growth off what’s proved to be a firm base, given all the problems there have been,” he said.

In contrast with WA and Queensland – which slumped when the resources sector came under pressure – SA opened new mines last financial year, including the $1.2 billion Prominent Hill copper mine and Terramin Australia’s Angas zinc mine. In its first year, Angas has injected more than $1.5 million into local business and exceeded production targets."

"Business SA chief executive officer Peter Vaughan said while challenges remain, the figures “point to a cautious recovery” and show the SA economy is resilient."

http://www.liveinaustralia.com/blog/?p=318

[Sojourner]

The local Wreckers at Elizabeth and also Noarlunga are going close to being bankrupted by the current land tax that they are being charged, six workers have lost there jobs already after they got their current land tax bill......

Isobel's Blog
Current Articles | Archives | Search
LAND TAX ANGER
Posted on 17 Aug, 2009

A spiralling land tax bill for a Lonsdale recycling company has once again highlighted the Rann Government’s unfair tax grab.

Land tax for the “U Pull It” company has skyrocketed from $9,020 in 07 to over $27,000 in 08 forcing the company to lay off 6 workers at its Lonsdale plant and placing pressure on the workforce at the companies Elizabeth site.

The company employs 10 workers at the Lonsdale plant.

Under the Rann Government, land tax has risen by almost 400% contributing over $2 billion to the states coffers since 2002.

Treasurer Foley will collect $549 million in land tax in 2009-10 compared to only $140 million in 2001-02.

In 2008 the State Liberal’s held a tax summit which revealed that this Government’s tax regime is hurting South Australian businesses and as a result we are losing jobs.

Jobs growth in South Australia under this Government has not kept up with the national average. Businesses in South Australia pay up to 50% more in taxes than Queensland.

“It is a disgrace that we are not supporting small business in this state, it is the backbone of our economy” Ms Redmond said.

A Redmond Government will review the State’s tax regime to encourage investment in South Australia. Without small business and without investment in this state we will not be competitive. We need to foster the small business sector and in turn this will provide jobs for the future of our State.

The Rann Government’s failure to address small business concerns over the tax grab is another example of a Government that has stopped listening to the community.

http://isobelredmond.com.au/IsobelsBlog ... ANGER.aspx

and

http://www.upullit.com.au/images/LAND%2 ... %20OUT.pdf

[smac]

I agree that land tax is an issue, but an increase of not quite $20k is not justification to put off 6 workers unless they are being grossly underpaid. Surely there were better examples around than this to use?

[Psyber]

I agree that land tax is an issue, but an increase of not quite $20k is not justification to put off 6 workers unless they are being grossly underpaid. Surely there were better examples around than this to use?

It may be enough to push a small business from making a small profit to making a small annual loss, or just not making enough to be worth the time and effort to go on.
There comes a point where you decide it is not worth the stress and the paper work, and quit, or give up hoping for improved business conditions, and carrying staff in that hope.
Then you either quit or prune the business heavily to try to regain reasonable profitability that way.

I had in the past run a couple of small business operations - the last one did well in the early to mid 1980s but was teetering on the brink of bankruptcy by 1987.
At that point I decided to sell off the stock to an interested competitor at cost, and quit.
I managed to sell the premises at a small profit, to offset writing off the theoretical good will value.
The staff had to go as part of that - I had kept them on as long as I could.
It was also about then I gave up employing my own staff in my medical practice, and moved into a serviced office, thus saving the increasing time spent on unpaid paperwork for the bureaucracy...

[Squawk]

Wont someone please do some analysis on how much extra money is now being paid by Australians who have been deleted from eligibility for Govt support for payments such as the baby bonus, solar panel rebate, changes to various health care charges, and so forth? In essence, this is a tax increase by stealth. Add that on top of the blatant revenue grabbing of SA's land and payroll tax, and it just wont be worth bothering to work hard to try and get on in life if you just keep having your financial reins pulled in.

[mick]

At least we don't have the corruption of NSW. Do we?

[dedja]

Sorry all, I implemented the current Land Tax IT system in 1998

Back then it collected approx $80M pa.

Yes, Land Tax has got out of control, but what about Stamp Duty, especially on property transfers? Now that's totally out of control.

[Magpiespower]

At least we don't have the corruption of NSW. Do we?

Does anywhere?

The 'culture of corruption' is so deep-rooted it's not funny.

For as long as anyone can remember, that's just the way things have been done up here.

Business as usual.

Especially with planning and development issues...

[Jimmy_041]

"Surging Australian economy continues to attract skilled migrants":

Thursday, September 24th, 2009

"A key indicator shows South Australia has soared ahead in economic growth, in comparison to other States. Household, business and government spending all defied the downturn and recorded strong growth in the past financial year, the ABS found. While some other states have been hit hard, SA has been opening new mines, such as the Angas zinc mine at Strathalbyn, and creating a robust economy, with 1.3 per cent growth in the quarter and 5.2 per cent over the year."

“This is actually a pretty good result,” Prescott Securities chief economist Darryl Gobbett said.

"State figures in the GDP data show a seasonally adjusted annual increase of 5.2 per cent in SA, compared with a 2.5 per cent increase in WA, 1.5 per cent in Victoria and 0.8 per cent in NSW. Queensland went backwards at negative 2.5 per cent. The indicator measures what was spent by households, business and government, on both consumption and capital investment."

“SA has come through this downturn pretty well,” Mr Gobbett said."

"He noted the growth was widespread, with household and government spending “a bit stronger than we’ve seen nationally”. “The other thing is what’s happening in the housing sector – construction is doing quite nicely. And business investment has held up.” Mr Gobbett said in the next two years the air warfare destroyer project, the expansion of Olympic Dam and potentially a good grain crop would lift SA further. “We could well see good growth off what’s proved to be a firm base, given all the problems there have been,” he said.

In contrast with WA and Queensland – which slumped when the resources sector came under pressure – SA opened new mines last financial year, including the $1.2 billion Prominent Hill copper mine and Terramin Australia’s Angas zinc mine. In its first year, Angas has injected more than $1.5 million into local business and exceeded production targets."

"Business SA chief executive officer Peter Vaughan said while challenges remain, the figures “point to a cautious recovery” and show the SA economy is resilient."

http://www.liveinaustralia.com/blog/?p=318

We're stuck in the '70s, says Cooper


SARAH MARTIN
January 19, 2010 12:01am
COOPERS Brewery managing director Tim Cooper has issued a stinging attack on the Rann Labor Government, accusing it of keeping the city in the 1970s.

In a letter to The Advertiser today, Dr Cooper says Premier Mike Rann's claims of economic prowess are unfounded and the city has been in a state of "stagnation" for 40 years.

"We were a very buoyant economy, it would seem, up until the 1970s; up until about 40 years ago Adelaide was the third city in Australia ... and relative to Queensland and Western Australia we have stagnated, and I think that is sad for us," Dr Cooper said.

"We had governments back in the 1960s and, before, focused on South Australia being competitive for business and for attracting business, and I think we have become less competitive since then."

Dr Cooper said Mr Rann's claim that he was getting "mining going" should be viewed with cynicism, given Labor opposed Roxby Downs in 1982.

He also lashed out at South Australia's tax regime and the lack of top-100 companies in the state.

"We now have the highest business taxes in Australia so, of course, we have become uncompetitive relative to other states," he said.

Mr Rann said Dr Cooper, who is a member of the Liberal Party, was expressing opinions that were "clearly a reflection of his long-held political views".

"Tim fails to mention that South Australia now has 103,700 more people in work than eight years ago when his friends in the Liberal Party were running the state," Mr Rann said.

"We have seven more mines up and running, and plenty more on the way."

[redandblack]

Nice quote, Jimmy.

Is this the prominent Liberal Party member Tim Cooper, whose company received a very large grant from the previous Liberal Government to relocate to Regency park

[Jimmy_041]

Doesnt make him wrong

His comment about the last 40 years crosses both parties in government - open both eyes (mind you Tim was probably 8 back then)

He is correct on Rann and mining - doesnt Mike love the mining story when it suits him - just like the desal plant he was totally against until he had no choice but to actually DO something

As for 103,700 more people in work than eight years ago - most work for him

[redandblack]

Doesnt make him wrong

His comment about the last 40 years crosses both parties in government - open both eyes (mind you Tim was probably 8 back then)

He is correct on Rann and mining - doesnt Mike love the mining story when it suits him - just like the desal plant he was totally against until he had no choice but to actually DO something

As for 103,700 more people in work than eight years ago - most work for him

Open both your eyes, Jimmy

[Jimmy_041]

Well and truly open - that's the number of new employees in the Labor Gavernment's Media Liaison Unit in the past 8 years

[redandblack]

Well and truly open - that's the number of new employees in the Labor Gavernment's Media Liaison Unit in the past 8 years

Open both your eyes, Jimmy

[Jimmy_041]

See - you've still got one shut - its even in your smilie - you can fool the smilies, mate - they've got you sorted