The opportunity for tax reform has been a major focus for me this week as I attended a small roundtable on tax reform convened by the Treasury in Canberra on Tuesday and as ALGA put the finishing touches to its submission on the Treasury's Taxation Issues Paper. The discussions at the roundtable, and a small number of other roundtables, together with submissions received on the Issues Paper, will inform the development of a Green Paper on Taxation Reform which the Treasury expects to release towards the end of this year. I am keen to ensure that Local Government's concerns and interests are reflected as much as possible in any Tax Review.
While there is a tendency in tax reform to focus on issues such as income and company tax cuts and possible changes to the GST, we must not forget that a key outcome of reform should be a greater alignment, where possible, between tax revenue raising and spending responsibilities. Local Government spends in excess of $32 billion annually on services and infrastructure for local communities but we raise just $14 billion in rate revenue. Our fiscal challenges are made that much harder because councils are responsible for more than $350 billion in non financial assets – about a third of all such assets across government, and yet we raise just 3.4% of taxes.
We are constantly fighting to maintain the integrity of our rates base against State Government rate capping, the imposition of state levies through rates notices and against increasing demands for rate exemptions from not for profit organisations. In addition, some councils also face special issues such as the refusal of lessees of Commonwealth land to make appropriate rate equivalent payments. All of these are issues we must put on the agenda in any tax discussion.
Our objective must be an outcome which improves Local Government’s access to the revenue we need to meet the needs of local communities, either through reform to the way we raise taxes or reform to the way tax revenue is allocated between the three levels of government.
Mayor Troy Pickard