Queensland’s reputation as a “low tax state” will officially be meaningless if the recommendations of a Victorian Government review of business taxes are put into effect, according to a peak national lobby group.
The Property Council of Australia says the Victorian Government report recommends abolition of $1 billion in annual stamp duty taxes and reform of Victoria’s more than 20 state taxes to just three – a flat rate land tax, gambling tax and payroll tax.
The Property Council describes it as the biggest state tax shake up since Federation.
Property Council of Australia, Queensland President, Tim O’Neill said the reforms would register as ‘a seven on the Richter scale’ and result not just in a flight of capital to Victoria, but a stampede.
“We have been recommending that the Queensland government should conduct a similar review, and now it seems they have little choice – even if Victoria do not implement all the recommendations it’s pretty obvious they are preparing for a modern, efficient and equitable tax system which will put Queensland’s rickety set of heritage listed tax laws to shame,” he said.
“The new West Australian Government has committed to a review of its state taxes, similar to the Victorian review.
“Business will follow and so will the jobs – no amount of business attraction incentives in the future will be able to lure companies like Virgin if Victoria can offer simplicity and efficiency in its tax system.”
Mr O’Neill said it was no longer enough to simply say that Queensland was a “low tax state.”
“We also need to have modern and efficient taxes – a “smart tax” system - and abolish some taxes which cost more to collect than they generate.”
He said stamp duty on commercial leases was just one example.
“It collects just $15 million per annum in revenue, costs more than this to collect and presents a huge compliance burden for business,” he said.
“This is a small beer decision for Queensland – Victoria are working on the big picture.”
Mr O’Neill said the Victorian recommendations would have a ‘tenfold’ impact compared with the decision by former Queensland Premier Joh Bjelke Petersen to abolish death duties.
The Property Council urged Queensland Premier Peter Beattie to support a review of state business taxes in readiness for the post 2005 environment when states will be flush with tax revenues generated by the new tax system.
The Property Council has written to the Premier twice on the issue and raised the proposal with the former Treasurer, David Hamill, prior to the election.
The Property Council says the Premier gave ‘in principal’ support to a review during a meeting with business leaders the day the election was announced.
It has produced figures showing property is the highest taxed sector of the state economy, with property taxes (stamp duty and land tax) generating one dollar in four of the state’s revenue base. Adding local government rates and charges means the property sector is already overburdened with taxes.
Queensland also reaped an unbudgeted $49 million stamp duty windfall in the last year – during a quiet market. In addition, it says a decision by the State Government to levy stamp duty on the GST inclusive price of transactions represents a “tax on a tax”.
“It’s time to demonstrate that Queensland can be just as progressive and tenacious as any other Australian state – doing nothing on state business taxes will inevitably mean a slide towards irrelevance in business terms,” Mr O’Neill said.