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ACT's tax regime too harsh: IPA

Andrew Barr.

Andrew Barr. Photo: AAP/Alan Porritt

The ACT government imposes higher taxes on businesses than any other state or territory, a conservative think tank says.

The Institute of Public Affairs says the territory's "burdensome" property tax structure was a major contributing factor to the "state's (sic) high tax result."

IPA senior fellow Julie Novak has also taken aim at the territory's tax reform efforts, criticising the package for not containing spending cuts.

In her report, Business Bearing the Burden, Ms Novak argues that the territory has Australia's most onerous property tax regime and she urges the territory government to "vigorously explore deep spending cuts".

However, Treasurer Andrew Barr said on Monday that Ms Novak's criticisms were rooted in a "dogmatic" ideological commitment to cutting taxes and government services.

The IPA researcher said the territory government's tax reform package in 2012 had the left the jurisdiction paying higher property taxes than any other.

"Indeed, under the Gallagher government's tax reforms, in which commercial property land taxes were subsumed into general rates, the ACT now has the most onerous property tax regime in the country," Ms Novak wrote.

"To its credit, the territory government maintains reasonably competitive payroll tax and insurance duties, but the property tax sting makes Canberra a less attractive place to conduct business.

"The most disappointing aspect of the ACT government's tax reform package, announced in the 2012-13 budget, is that it did not outline a plan for comprehensive spending reductions as a vehicle to lighten the business tax load over the medium to long term."

She went on to attack the ACT Labor government for its "overspending" in the past 10 years.

"The uncompetitive tax position of the ACT cannot be separated from the overspending of the territory government, especially during the past decade," Ms Novak said.

"The commitment to remove insurance taxes and conveyancing duty, over a period of between five to 20 years, is laudable, but the big spending architecture has been kept in place.

"And even though Canberra is one of the wealthiest communities in Australia, there is no doubt that community expectations for more spending will place even more pressure on the ACT budget.

"To create space for more tax reductions that boost business growth and therefore new jobs, the ACT has no long-term option but to more vigorously explore deep spending cuts."

The Treasurer defended his government's record on business tax.

"The ACT has a business-friendly tax regime," Mr Barr said in a statement.

"The IPA appears to have missed the fact that in the last budget the ACT government lightened the taxation burden on local businesses.

"Due to the cut to payroll tax, the ACT has the highest payroll tax threshold in the nation, and is the lowest-taxing jurisdiction for businesses with a payroll of up to $4.7 million.

"The IPA report also shows that the ACT has the most competitive taxation regime for small- and medium-sized businesses."

The Treasurer said the government had no plans for the "deep spending cuts" prescribed by Ms Novak.

"The ACT government has a measured and responsible plan to return the budget to surplus by 2015-16," he said.

"We will do this by making responsible savings.

"Deep spending cuts, as advocated by the IPA, would needlessly harm the ACT economy."

11 comments

  • Finally, some sanity.

    Last time I heard Barr talk he said being $380 million per annum in the can was "economic stimulus". How the ACT Government can stimulate an economy the size of a postage stamp in the middle of NSW is beyond me.

    I suppose one man's stimulus is another man's total budgetary mismanagement , incompetence, and inevitable tax increases and service reductions.

    Commenter
    Economist
    Date and time
    January 08, 2013, 7:29AM
    • Think of it as being about the size and commitment of Bankstown's council responsibility.

      Commenter
      Nice Place To Live
      Date and time
      January 08, 2013, 10:10AM
  • Are we seriously supposed to think that anything produced by the Institute of Public Affairs is ANYTHING but liberal party/big business propaganda? An organisation funded by ExxonMobil BHP Billiton, Phillip Morris, Caltex, Shell and British American Tobacco? Please.

    Commenter
    Xavier
    Location
    Dickson
    Date and time
    January 08, 2013, 8:00AM
    • @ Xavier The IPA stands for a Free Market, oppossed to the socioeconomic structure of communism which has failed, it also stand for Free flow of Capital, if people want to take a risk with buisness, they should reep the rewards instead of the self entitlement culture we see now, they also stand for a Efficient Government, sadly something we don't have, they also stand for Rule of Law, and Representative Government. As far as Representative Government I personally would favor the Swisse Style. (Courtesy of Wikipedia as your's was ) !.

      Commenter
      Martin Says
      Location
      Canberra
      Date and time
      January 08, 2013, 10:01AM
    • IPA stands for greed, pure and simple. They want all of the benefits and none of the responsibility of doing business in the ACT. If you're not an aspiring millionaire mired in self-interest and you still believe their guff, you're a stooge, pure and simple.

      Commenter
      yumq
      Location
      CBR
      Date and time
      January 08, 2013, 12:41PM
    • Labor/Greens ! ..If your not an aspiring no hoper mired in the culture of self entitlement and still believe that Labor/Greens are doing a good job then you're a stooge pure and simple.

      Commenter
      Martin Says
      Location
      Canberra
      Date and time
      January 08, 2013, 4:22PM
  • What would the IPA know, Wayne Swann said all states and territories should "do their share of heavy lifting" on tax reform and urged treasurers to follow the ACT government.( Dec 17th The Australian )..Further proof these Labor Governments want to destroy Buisness Confidence.

    Commenter
    Martin Says
    Location
    Canberra
    Date and time
    January 08, 2013, 8:22AM
    • Cost of living pressures int he ACT are too high - petrol being 17c a litre dearer than Sydney for example. But we are a captive market and one ripe for the milking.

      Commenter
      Outraged of Palmerston
      Date and time
      January 08, 2013, 9:01AM
      • I doubt that those big mutli-nationals have any interest in setting up shop in Canberra ACT, Xavier. The ACT is over regulated by social engineering busy bodies.

        Commenter
        TheJoker1214324
        Date and time
        January 08, 2013, 9:25AM
        • There is only small business in Canberra and small business should not be the hardest hit. The Federal government should, however, impose higher company tax on big business that obtains labour off-shore (overseas). That way those those companies that send jobs off-shore to increase their profits then subsidise the growing welfare bill for unemployment in the country. The worst are telecommunication companies making multi-millions in profits, manufacturing etc. They have no social conscience and only want to TAKE $'s (from Australians) and don't want to GIVE back by keeping jobs in Australia. If a big business is making $M profit and sends jobs off-shore, hit them hard with company tax.

          Commenter
          Felix
          Location
          ACT
          Date and time
          January 08, 2013, 9:44AM

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