Unformatted text preview: ation Paper TRP
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Conference Series No. 21. 139 Commission on Fiscal Imbalance APPENDIX A: SUMMARY OF THE INTERGOVERNMENTAL AGREEMENT ON THE REFORM OF
COMMONWEALTH-STATE FINANCIAL RELATIONS
The Agreement relates to the reform of Commonwealth-State financial relations consequent upon the introduction of the
Commonwealth Government’s A New Tax System (ANTS) package and, in particular, of the GST. The original
agreement between the Commonwealth and the States and Territories was signed on 9 April 1999. It was revised in the
light of the changes to the ANTS package (particularly to narrowing of the GST base) announced by the Prime Minister,
Mr Howard on 28 May 1999, and signed on 20 June 1999. It is reproduced as Schedule 2 of A New Tax System
(Commonwealth State Financial Arrangements) Act 1999. Objectives
The objectives of the reforms contained in the Agreement are:
♦ achievement of a new national tax system, including the elimination of a number of existing inefficient taxes; ♦ provision to State Governments of a more robust tax base, that can be expected to grow over time; and ♦ an improvement, once the transitional changes have been completed, in the financial position of all State Governments. Reform measures
The following reform measures are incorporated in the Agreement:
♦ the Commonwealth to provide all GST revenue to the States; ♦ the wholesale sales tax to cease to apply from 1/7/2000 and neither it nor any similar tax to be reintroduced in the future; ♦ the temporary safety net arrangements for the taxation of petrol, liquor and tobacco to cease on 1/7/2000; ♦ The payment of Financial Assistance Grants to cease on 1/7/2000; ♦ Specific Purpose Payments to the States to continue, with the Commonwealth having no intention of cutting aggregate
SPPs. The Agreement does not state whether this intention applies to SPPs expressed in nominal or real terms although it
does refer to the objective of State governments being financially better off under the new arrangements; ♦ States to cease to apply the following taxes:
— Bed taxes, from 1/7/2000;
— Financial Institutions Duty (FID), from 1/7/2001;
— Stamp duties on quoted marketable securities, from 1/7/2001; and
— Debits tax, by 1/7/2005, subject to review by the Ministerial Council (see below for details of the Council). ♦ The Ministerial Council will, by 2005, review the need for retention of stamp duties on:
— non-residential conveyances;
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