Tax reform summit raises many questions

Local Government in Western Australia recently had the opportunity to discuss the implications of a GST through a Tax Summit, titled 'Taxation Reform: Back to Basics - An Examination of Key Issues for Western Australia.' Organised by the Western Australian Municipal Association (WAMA), delegates heard from a range of speakers regarding the likely effects of the Howard Government's proposed tax changes.

Following a variety of perspectives presented at the Summit, WAMA released a statement asserting that the Coalition's tax package has a long way to go before it will be truly compatible with the real needs and expectations of government, business and communities in Western Australia.

WAMA is calling for the following.

  • Maintenance of direct Federal funding to Local Government with a guarantee that funding will be increased to sustainable levels.
  • Restoring the permanent $15 million per annum cut from Financial Assistance Grants.
  • Progressively increasing Local Government grants to either 1% of total Commonwealth tax revenue or 6% of GST.
  • Involving Local Government in all intergovernmental negotiations on tax and financial relations.

Speaking at the Summit, economist, Professor Neville Norman said there is a lot wrong with the present Australian taxation system that will not be cleared up by the new proposals. He called for a longer term view of the issues. State Minister for Local Government, Paul Omodei claimed the proposed reforms will bring fairer outcomes but could not assure Local Government of an improved financial position.

"Given that the Commonwealth package will be financially neutral for the States in the first three years, any increase in funding for Local Government would leave States worse off than currently," he said. "Nobody in Local Government should get excited about new money being available in the near future."

Greg Hoffman from the Local Government Association of Queensland, said Local Government still needs clarification of many issues. He said problems could have been avoided had there been proper consultation with Local Government.

"The embarrassment of having to make a policy on the run could have been avoided through proper consultation with Local Government," he said. "A new culture of consultation is required to ensure that further gaps in policy do not occur."

Democrats Spokesperson on Finance and Tax, Senator Andrew Murray, questioned the effectiveness of the current tax package. He covered the equity of excluding food and other necessary goods and services from the GST as against other forms of financial compensation for low income earners.

For further information contact John Martin, Director Strategy at WAMA, telephone (08) 9321 5055.