The hot button issue of taxation often hits hard at the end of the financial year, but the Commonwealth has created a buzz about the topic following the release of its new Tax Discussion Paper.
The Paper, released by the Treasury on 30th March, 2015, aims to modernise Australia’s outdated taxation system to meet new demands in productivity and the wider economic scope of the nation’s future.
The federal government has left the Discussion Paper open for formal submissions until 30th June, 2015.
And the local government sector has already posted its responses to the Discussion Paper and has been welcomed by the Australian Local Government Association (ALGA).
ALGA President Troy Pickard said all levels of government and the community need to be involved in the review of taxation, and in looking how “we raise and distribute the tax revenue we need to deliver the services and infrastructure our communities need and want”.
“Local Government raises about three per cent of taxes through local rates,” Mr Pickard said.
He said it is important that “we maintain the integrity” of the rates system by protecting it from encroachment by other levels of government which want to use property rates or levies to fund their services and by ensuring that any rate exemptions granted to not for profit bodies can be justified and are in the community’s interests.
Mr Pickard lamented that Australia’s current tax system is “not serving local communities well”.
According to Mr Pickard, local government as a whole is raising as much revenue “as can be reasonably expected” through its own tax effort.
In addition to rates, councils depend heavily on grants from state and federal government, but Mr Pickard said these grants have been falling as a proportion of tax revenue and “communities are feeling the squeeze”.
In its submission to the Tax Review, ALGA will call for a fair share of total taxation revenue for local government and highlight the efficiency and effectiveness of councils in delivering services.
The mood is more inquiring in the Sunshine State, where the Local Government Association of Queensland (LGAQ) is preparing its own major discussion paper on the issues in tax reform following the release of the Abbott government’s discussion paper.
These issues that concern Queensland councils are the future of land tax reform, access to a set of revenue stream from a growth tax and questions over which level of government delivers which service to the community and how those services should be paid for.
LGAQ President Margaret de Wit said councils cannot continue to rely on rates and other charges to fund services the community wants, particularly when in many cases they are providing services that the state has ceased to provide.
“Local government in Queensland has long argued for access to a set revenue stream from a growth tax and we will be arguing strongly for this to be considered as part of this review,” Ms De Wit said.
She said local communities were losing out from a system too reliant on income taxes and too inefficient in terms of fairly distributing tax revenue.
According to Ms De Wit, one issue “particularly relevant” to local communities is the future of land tax and how any reform will impact on the overall tax burden.
She said any move to increase or broaden state land tax could affect the flexibility of local government in regard to rates revenue as it would impact on the community’s capacity to pay.
