Published: 21 May 2018

THIS year’s Federal budget and the Opposition response suggest there is $300 billion worth of revenue over the next 10 years that the Government is willing to hand back to taxpayers.

What may appear to cynics as a vote-buying exercise has been pitched as tax reform. We are part of a federal system. When it comes to tax reform, are tax cuts to individuals and companies at the Federal level the most urgent? 

What about reform of State taxes? There is not a tax at the State level that is both fair and efficient. State taxes raise about 20 per cent of the government’s revenue but most people don’t pay any. They don’t pay land or payroll tax because of the narrow base. Those who do, pay at a higher rate to make up for the narrow base. A fairer tax system would create benefit for all Tasmanians. 

It’s been a little surprising that while large companies are clamouring for corporate tax reductions there is less enthusiasm for individual tax cuts.

Unfortunately, the willingness to make meaningful reforms doesn’t extend to the cohort of politicians on both sides of politics.

For example, payroll tax was handed to the States by the McMahon Government in the early 1970s.

Since then the base has narrowed and the rate risen.

What was once a reasonably fair tax has degenerated as all States have fiddled with the rate and the thresholds, trying to make their State more competitive, so it now only applies to a few. Now only large employers pay. Small employers and self-employed persons don’t. It’s widely regarded as anti-employment and probably beyond repair.

If we are serious about creating jobs, why not scrap it and negotiate with the Federal Government for a share of the tax cuts about to be handed out to companies and individuals.

The impact of such a move would be more immediate than any of the proposed income tax changes which are programmed to have delayed effects to avoid risking the budget bottom line. 

The North-West of Tasmania would benefit economically as much as anywhere.

Those of us who have been fortunate enough to benefit from rising houses prices need to be mindful of the fact that our gain is someone else’s loss.

Those losses are represented by the inability of people to find suitable accommodation at affordable prices that is essential if we are to cater for the ever increasing diversity of needs from students, young families, working people,unemployed, underemployed and retired people who make up vibrant and healthy communities.

In my view, rather than hand back income taxes to buy votes, scrapping stamp duties and reforming our narrow land taxes would also be far superior.

A broader-based land tax would be much fairer, would dampen house price rises, would shift a little revenue to State governments and enable the windfall effects of the housing boom to be spread a little wider especially to those hardest hit.

We are, so we are told, about to be endowed with too much income tax in Federal coffers. Trying not to leave people worse off is always a policy challenge.

What better time to make changes across the Federal system. The benefits of the pre-GFC boom were wasted. Let’s not repeat the mistake.

Ruth Forrest is the Independent Member for Murchison 

Go Back