Unformatted text preview: ple inter-State comparison of taxes, as a result of the wide diversity of tax bases and
scales (for a comprehensive comparison see NSW Treasury, 1996 and 2000). However the following points illustrate
major differences between taxes affected either directly or indirectly (through RRPs) by the IGA arrangements:
♦ All States except Queensland imposed business franchise fees on petrol;
All States except Queensland imposed business franchise fees on tobacco;
Tasmania and the Northern Territory imposed lower rates of debits tax than the other States;
All States except Queensland imposed FID;
Only NSW and the Northern Territory imposed accommodation levies (bed taxes). The differences in State tax rates and bases ultimately result in differences in taxation per mean head of population,
which are presented in Table 13. 126 Commission on Fiscal Imbalance TABLE 13
STATE AND LOCAL TAXES PER HEAD OF MEAN POPULATION
1992-93 99-2000 NSW
2,337 Queensland 1,243 1,742 W. Australia 1,414 2,150 S. Australia 1,399 2,149 Tasmania 1,346 1,803 ACT 1,529 2,005 NT 1,207 2,220 Source: Australian Bureau of Statistics, catalogue number 5506.0, Table 2. Table 14 compares the 1999-2000 ranking of per capita taxation (1=highest) with the ranking of the length of the
transitional periods before GST revenue break-even occurs (1=longest period).
STATE PER CAPITA TAX AND BREAK-EVEN PERIOD RANKINGS Per capita tax ranking (1999-2000)
3 Break-even period ranking
(1=long) 1 (equal)
5 (equal) Sources: Tables 12 and 13. The above Table clearly illustrates the strong association between high per capita taxes and long break-even periods.
Returning to Table 12, the final five rows indicate how, during the transitional period, the distribution of excess GST
revenue is biased in favour of low tax jurisdictions. Whether measured in undiscounted or present value terms,
Queensland accounts for about 60% of all-States excess revenue. The 2000-01 present value of excess revenue
represents $422 per capita in Queensland and only $11 per capita in NSW.
In all, the transitional process involves very significant redistributive benefits to some States. It is not clear whether this is
a deliberate effect or an unintended consequence. Certainly it would have been possible to design a policy under which
the benefits were more equitably distributed between the States. If the States believe that further taxes will be abolished
in 2005, as foreshadowed in the IGA, they would be well advised to design their tax strategy to minimise the break-even
period in the new transitional period. This could be achieved by the prior abolition of taxes slated for possible abolition in
2005. Victoria already appears to be heading down this path with the announcement in its 2001-02 budget of the
abolition in the next three years of some further business stamp duties.
One of the major benefits cl...
View Full Document