Ahead of this week’s COAG meeting, the ACT Chief Minister has indicated he is willing to consider a state and territory role in setting and collecting income tax. The ACT Council of Social Service opposes income tax collection by states and territories.
Susan Helyar, Director of the ACT Council of Social Service, explained ACTCOSS' opposition: “It’s clear all governments need reliable and adequate sources of revenue to fund the services the community needs. If the Commonwealth ‘makes room’ for state income taxes this is likely to have the opposite effect: there is a risk of a ‘race to the bottom’ as states compete with one another to lower income taxes, as is the case in countries like the USA which have State income taxes.”
Ms Helyar noted, “If income tax powers were extended to the states and territories there is a risk that states and territories with the lowest incomes will struggle to raise revenue to provide essential services. To raise the same revenue per person as wealthier jurisdictions they would have to impose higher income taxes. If they can’t raise the same revenue then many of the poorest people in the country would have less access to services.
“People should receive good quality essential services such as health care, schools, and community services regardless of their income and where they live. Tax reform should reduce, not increase, inequality.
“Any change in the tax mix needs to focus on addressing the horizontal fiscal imbalance between the states and territories.
“This was acknowledged by the Chief Minister during his Lateline interview when he said schools and hospitals are very important to Australian residents, regardless of the state or territory that you live in.
“The proposed extension of taxation powers to the states and territories puts people’s access to these essential services at risk.”
Ms Helyar concluded, “ACTCOSS welcomes the Chief Minister’s concern for ensuring that all Australians have access to essential services regardless of where they live. ACTCOSS urges Mr Barr to prioritise increasing equality, and ensuring reliability and adequacy of revenue at the centre of his consideration of any proposal regarding federal, state and territory roles in levying income taxes.”
For more information or comment please contact
Susan Helyar, Director, on 0448 791 987 or 02 6202 7200.