Australia Abolishes Inefficient State Taxes

by Mary Swire, Tax-News.com, Hong Kong

10 April 2007

Australian Treasurer Peter Costello has announced that a number of "inefficient" State tax have been abolished by the government as a result of its ongoing tax reforms.

According to Costello, the reforms have led to the abolition of accommodation tax, financial institutions duty, marketable securities duty and debits tax. In addition, he said that agreement has been reached on a timetable for the abolition of the following: mortgage duty, rental duty, lease duty, stamp duty on unquoted marketable securities, cheque duty and stamp duty on conveyances of non-real non-residential property.

Despite this progress, Costello said that stamp duty on non-residential conveyances of real property is the last State tax listed for abolition in the Intergovernmental Agreement for which the States have yet to agree to an abolition schedule.

"I again called on the States and Territories to develop an abolition schedule for this remaining tax," he stated. "I indicated that the Australian government would be willing to be flexible as to the timing and phasing of the abolition timetables. In particular, I said that the Australian government would be willing to consider an abolition schedule that did not commence until 2010-11, when the bulk of the existing Intergovernmental Agreement taxes will have been abolished."

"I also indicated, in response to a request from one of the States, that the Australian Government would be willing to consider alternative tax reform reductions of equivalent value," the Treasurer added. "The Australian government will continue to pursue this matter until it is resolved satisfactorily. The onus is now on individual States to provide an indication of how each intends to implement its commitment."

Last month, Minister for Revenue and Assistant Treasurer, Peter Dutton, introduced new tax legislation aimed at improving the country's taxation system by reducing compliance costs, improving certainty for taxpayers, supporting philanthropy and ensuring the integrity of the tax base.

The Tax Laws Amendment (2007 Measures No. 2) Bill 2007 affects taxation in a number of areas, including mining and prospecting rights, research and development, donations of listed shares to deductible gift recipients, deductions for contributions to fund-raising events, and measures affecting venture capital activities.

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