Costello's tax study should also look at inter-government tax sharing
28 February 2006
The Federal Treasurer's international tax review should be expanded to examine the way nationally collected taxation revenue is returned to other spheres of government, the President of the Australian Local Government Association, Cr Paul Bell, said today.
"While we welcome the review, it needs to be remembered that the Australian Government not only collects taxation revenue for Commonwealth purposes, but also for state and local government purposes as well," Cr Bell said.
"The federal government collects more taxation revenue than it needs for own purpose expenditure and returns funds to state and local government, which have restricted ability to raise their own taxation revenue.
"Local government has only one source of taxation revenue - property rates - and increasingly relies on federal funding to meet increasing demand for services and infrastructure.
"But federal funding, in the form of local government financial assistance grants ($1.6bn in 2005-06), is only linked to CPI and population increases and does not provide councils with access to growth funds.
"State governments secured access to growth funds through the New Tax System, gaining access to the GST. But local government continues to languish on financial assistance grants.
"The value of local government financial assistance grants as a proportion of Commonwealth revenue, will have fallen from nearly 1.2% in 1993-94 to 0.97% in 1996-97 and to just 0.77% by 2007-08.
"ALGA seeks reform of federal-local government financial relations. In particular, we seek access to a share of at least one per cent of national taxation revenue. "An international review of the way in which federal governments redistribute taxation revenue to states and local government would be a useful start in this reform process," Cr Bell said.
- Contact
- Cr Paul Bell AM, ALGA President - 0418 791 596
- Rohan Greenland, ALGA Public Affairs - 0412 85 9434 / 02 6122 9434
