The Property Council today welcomed the announcement of further tax reforms by six states and territories. It warned however that the proposal did not go far enough.
Property Council Chief Executive, Peter Verwer, said the states and territories should finish the job.
“The GST was designed to replace old fashioned, inefficient taxes with an efficient one.”
“There were nine taxes listed in the original deal between the states and territories and nine should be eliminated”, Verwer said.
“A deal is a deal”, Verwer said.
“The six states and territories are proposing a long and slow program for reforming nuisance taxes that runs until 2011”.
In addition, they want to drop stamp duty on commercial property from the list of taxes to be eliminated.
“Stamp duty on commercial property is by far the most inefficient of all state taxes because it feeds into higher rents for business and higher prices for consumers”, Verwer said.
Mr Verwer said it would be crazy to undertake a reform program that side-stepped the most inefficient indirect tax.
“The counter proposal by the states and territories proposes to reform all but the most inefficient tax”. Verwer said.
“The states and territories shouldn’t dodge the simple promise made to all Australians that the GST would be used to replace archaic state taxes that drag down investment and jobs.
The Property Council says that every tax mentioned in the GST deal should ultimately be eliminated as GST revenue flows continue to increase. Under this arrangement the states and territories will always remain better off than under the pre-GST system.
“Since the GST came in, the states and territories have collected $9 billion more in property taxes than they budgeted”, Verwer said.
“They’ve received a property windfall and a GST windfall”, he said.
“The GST was designed to replace these hidden, inflationary taxes”.
“The states and territories should honour the GST deal in full, rather than offer a half baked response to a no-lose reform package from the Federal Government”.
For more information contact:
Peter Verwer, Chief Executive, Property Council of Australia, 0407 463 842 or 02 9033 1920