by stan » Wed Mar 30, 2016 1:14 pm
Turnbull’s plan for state income tax
PRIME Minister Malcolm Turnbull will propose a radical overhaul of Australia’s taxation system aimed at fixing the “failures” of federation when he meets with state and territory leaders this week.
Mr Turnbull said the “once-in-several generations” reform would allow the states to collect income tax as they scramble for extra funding for schools and hospitals. This would be the first time since WWII that state and territory leaders could set their own rate of income tax.
“What we are proposing to the states is we should work together on this basis, that we, the Federal Government, will reduce our income tax by an agreed percentage and allow State Governments to levy an income tax equal to that amount that we have withdrawn from,” he said.
“There would be no increase in income tax from a taxpayers’ point of view, he or she would pay the same amount of income tax.
“But the States would be raising the money themselves.”
Mr Turnbull said under the plan the Federal Government would administer the scheme, meaning there was no compliance cost to the states, and would apply only to personal income tax, not company tax.
“At the same time, we would then, with agreement with the states, withdraw from a number of the grants programs we have, so that from the Federal Budget’s point of view, the outcome would net off,” he said.
“We would be making fewer grants to the states but we would be receiving less income tax ourselves, the states would be receiving the income tax to cover those responsibilities.
Mr Turnbull will meet with state and territory leaders for Council of Australian Government (COAG) talks on Thursday night and Friday, said the changes were the only way to “genuinely reform” federation.
“I believe there is a real recognition that there is a failure at the heart of the federation and this is the failure,” he said.
“It is the failure of the States to have access to the revenue sources, to be able to do what a Government should be able to do.”
Mr Turnbull said the proposed reforms would give the states more control over their finances and reduce the need for them to go “cap in hand” to the Federal Government.
“You get this debilitating debate where the State says, ‘we don’t have any money, Canberra you have to raise the tax to give it to us’,” he said.
“The State Governments are sovereign Governments in their own right … They should have access to the source of funds to be able to fund their services.”
Mr Turnbull said smaller states would not be disadvantaged under the plan.
“I have talked to the Premiers of SA and Tasmania about this directly ...The opportunity here is to enable those State Governments and those State Parliaments to really be responsible for what they are doing,” he said.
“At the moment, if a State Government, a State Minister has a particular service or agency that is not performing well, he or she can try and manage it better.
“He or she can go to the Premier or the State Treasurer and say let’s put up land tax or payroll tax and raise more money, or, and this is the easiest one, get onto television and demand the Federal Government send them more cash.
“That is essentially a cop out.”
Read my reply. It is directed at you because you have double standards
