Weatherill’s tax and services proposal poses big risks for taxpayers and service users

ACOSS and the South Australian Council of Social Service responded jointly today to SA Premier Jay Weatherill’s proposed tax and federation reform deal.

“The South Australian Premier’s proposals underscore the risks of tax and federation reform being pursued as a ‘deal’ between Governments rather than a reform agenda which delivers clear benefits for people as both taxpayers and service users,” said ACOSS CEO Dr Cassandra Goldie.

“The proposal in its present form poses big risks for low and middle income taxpayers and service users.”

Ross Womersley, Executive Director of SACOSS said, “We commend the Premier for his determination to secure the revenues South Australia and other States and Territories need to fund essential services like health education and social services. He has been prepared to tell voters the honest truth that existing public revenues cannot properly fund the services the community needs into the future.

“Tax reform must be about increasing revenue as well as improving fairness and efficiency. However the Premier’s proposals do not achieve this goal and they pose big risks for people on low and middle incomes, both as taxpayers and people in need of services.

“As taxpayers, people on low and middle incomes face the prospect of paying more while people who are better off pay less. This is the clear result of using a higher GST to pay for income tax cuts, as modelling released by ACOSS earlier this month clearly shows.”

Dr Cassandra Goldie said, “Our concern is that as service users, the public would get no guarantee in return that essential health, welfare and education services would be properly funded. The huge Commonwealth funding cuts to health and schools would remain in place, and they would have to take the Commonwealth that the proposed deal on sharing of the income tax base with the States would stick, and then take their State on trust that the money would be spent on essential services.”

“The proposal would amount to a deal between Governments with too many risks and too few guarantees for taxpayers and consumers.

“What if the Commonwealth retreats from its income tax sharing commitment? For States, 100% of GST revenue is a better deal than an uncertain share of a larger tax base controlled by the Commonwealth.

“Where is the commitment to a fairer tax system without tax shelters for the well off like negative gearing, private trusts and superannuation tax breaks that mainly go to the top 20%?

“What do low and middle income earners get in return for paying a higher share of the overall tax take through the GST? There are no guarantees that the extra money available to States would be used to fund essential services.

“Not only that, the Commonwealth cuts to health and schools remain in place and service guarantees through tied grants would go. What happens to refuges for victims of domestic violence, hospitals, and schools? There is no guarantee or accountability that people will have universal access to these services regardless of their income and where they live in Australia.

“The proposed deal would deliver more revenue to the States but for how long? And for what purpose?

“There are too few guarantees and too many uncertainties in the proposal.

“ACOSS is open to reform of tax and federation to deliver the revenues Governments need for essential services, to secure clear guarantees for essential services, and ensure that tax is raised on the basis of fairness, economic efficiency, and ability to pay.

“A first priority and common ground through the National Reform Summit should be closing down tax concessions no longer fit for purpose and a shift from inefficient taxes like stamp duties. All options should remain on the table and we should open up the public debate about what we want out of tax and federation reform in the public interest.

“We are concerned at the current fixation on changing the GST as some-sort of panacea by making it more regressive, when this is the last place we should be looking,” Dr Goldie said.

Media Contact: Fernando de Freitas – 0419 626 155

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