By Tim McKibbin, REINSW CEO
||I have been pondering the state and federal taxation systems for some time. It is clear they are holding back New South Wales and the Australian economy as a whole, and now is the time to have a sensible debate in regard to this issue. State taxes disproportionately burden property transactions and dealings, and payroll tax is a disincentive to employment.
Every level of government taxes property. Local government has developer contributions and council rates, the state government has stamp duty and land tax, while the federal government has the Goods and Services Tax (GST).
There is clearly an uneven playing field when it comes to property transactions. Stamp duties on many other transactions were abolished as part of the introduction of the GST in 2000.
The share market, for example, has no equivalent stamp duty as is the case with property.
As I am sure you can all recognise, for too long the state government has profited from property consumers simply trying to put a roof over their heads. In the last financial year the Sydney housing market rescued the NSW Government’s budget, allowing it to creep back into surplus.
At a national level there is no uniformity between the individual state tax systems and accordingly, when doing business over borders this adds to the compliance costs. Because of the complexity of the state tax laws our tribunals and courts are consumed with unnecessary litigation that is not only intrusive but benefits no one.
What can be done?
I constantly hear talk about reducing red tape and government waste. Abolishing all state taxes will mean that industry and commerce’s compliance costs, and the public servants administering and supporting the bureaucracy in this area, vanish. Those savings alone should be inspiration enough.
The loss of revenue from these discriminatory and inefficient state taxes could be replaced by expanding the capture of the GST. Some may argue that the GST was sold to us on the basis that these taxes were going to be phased out anyway, but that is another story!
This may seem audacious, though in my view it is not; it is very sensible and has precedent in other jurisdictions. The GST is broad based and does not as a consequence influence asset acquisition between classes.
Reviewing taxation and creating a better and fairer tax system is high on our agenda during 2014. We will lobby government fiercely with a view to abolishing these unnecessary taxes.