NSW seeks new national deal on tax reform

Paul Osborne

MAIN POINTS FROM FEDERAL FINANCIAL RELATIONS REVIEW

GST

* State treasuries should do their sums on projections of national GST revenues

* State governments, in consultation with the Commonwealth, should assess and agree options for lifting the GST rate and/or expanding the base over the medium to longer term

* At the same time, inefficient state taxes should be reduced

* Some of the revenue gained from changes should go to lower income households to maintain equity

LAND TAXES AND STAMP DUTY

* The NSW government should replace transfer duty with a broad-based land tax

* There are a variety of models to make the shift fair and efficient

* These include an option to allow homeowners to voluntarily opt into land tax or pay transfer duty at the next purchase

* NSW would need a federal assurance it won't get a lower GST share as a result of tax reform

PAYROLL TAX

* The NSW government should propose a national approach to payroll tax reform

NATIONAL CABINET/COMMONWEALTH FUNDING AGREEMENTS

* The last federal budget included more than 100 funding agreements

* All such agreements should be reviewed and monitored to ensure they get better outcomes

* The national cabinet should be an "inter-governmental body of equals" with its own independent secretariat

INSURANCE TAX

* All specific taxes on insurance products should be abolished, replaced by a levy on property owners and broad-based land tax

ROADS

* A national road-user charge should be introduced, starting with electric vehicles

* The charge would be rolled out more broadly, replacing vehicle registration, licence fees, stamp duties on motor vehicles and motor vehicle insurance with a distance-based charging scheme

* Such a scheme better reflects the social costs of road use, including wear and tear, pollution and congestion. Revenue should be tied to roads and transport projects

KEY QUOTE FROM THE REPORT:

"(Tax reform) will create better conditions for households and businesses to recover and simultaneously deliver more secure and reliable funding for the states to rebuild their balance sheets for future generations."

Source: Federal Financial Relations Review report