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| State and territory leaders react to federal proposal to levy own income taxes State and territory leaders react to federal proposal to levy own income taxes | |
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| Premiers and chief ministers have reacted to a radical proposal to let state and territories levy their own income taxes, with at least one leader saying the idea is worth pursuing. | Premiers and chief ministers have reacted to a radical proposal to let state and territories levy their own income taxes, with at least one leader saying the idea is worth pursuing. |
| Guardian Australia on Wednesday revealed the federal government may offer the states and territories a proportion of income tax from 2020 onwards at this week’s Council of Australian Governments (Coag) meeting. | Guardian Australia on Wednesday revealed the federal government may offer the states and territories a proportion of income tax from 2020 onwards at this week’s Council of Australian Governments (Coag) meeting. |
| Australian Capital Territory chief minister, Andrew Barr, said the proposal was the “next logical step” in changing the tax mix and eradicating “inefficient” state taxes. | Australian Capital Territory chief minister, Andrew Barr, said the proposal was the “next logical step” in changing the tax mix and eradicating “inefficient” state taxes. |
| “I think there’s certainly scope for reform of taxation,” he told ABC’s Lateline program. “It’s an option that needs to have a public debate and we certainly look forward to what the prime minister [Malcolm Turnbull] will put on the table this week. | “I think there’s certainly scope for reform of taxation,” he told ABC’s Lateline program. “It’s an option that needs to have a public debate and we certainly look forward to what the prime minister [Malcolm Turnbull] will put on the table this week. |
| “Income-taxing powers would be part of a broader tax mix than for state and territory governments. In the spectrum of taxes that are levied in Australia, they are relatively efficient. They certainly pass the test of being able to be levied progressively so that you can certainly tax higher-income earners more and have a fairer tax system as a result,” Barr said. | “Income-taxing powers would be part of a broader tax mix than for state and territory governments. In the spectrum of taxes that are levied in Australia, they are relatively efficient. They certainly pass the test of being able to be levied progressively so that you can certainly tax higher-income earners more and have a fairer tax system as a result,” Barr said. |
| “So they are a better form of tax than, for example, some of those blunt measures like the GST, for example. So to the extent that they become part of the state and territory tax mix, I am relaxed about that.” | “So they are a better form of tax than, for example, some of those blunt measures like the GST, for example. So to the extent that they become part of the state and territory tax mix, I am relaxed about that.” |
| The proposal is in line with the recommendations of the national commission of audit. | The proposal is in line with the recommendations of the national commission of audit. |
| Head of the audit, Tony Shepherd, told ABC Radio that it was a necessary part of fixing the budget. | Head of the audit, Tony Shepherd, told ABC Radio that it was a necessary part of fixing the budget. |
| “Let’s get back to the basics ... and get rid of these inefficient state taxes,” he said. “We keep squibbing the thing that we keep spending more money than we’ve got.” | “Let’s get back to the basics ... and get rid of these inefficient state taxes,” he said. “We keep squibbing the thing that we keep spending more money than we’ve got.” |
| Colin Barnett, the premier of Western Australia, has spoken to Turnbull about tax reform, but did not say if he supported the income tax proposal. | Colin Barnett, the premier of Western Australia, has spoken to Turnbull about tax reform, but did not say if he supported the income tax proposal. |
| “If the prime minister can get the states to agree I think it could be quite a significant Coag,” he told ABC Radio. | “If the prime minister can get the states to agree I think it could be quite a significant Coag,” he told ABC Radio. |
| Northern Territory chief minister, Adam Giles, would not comment until he had a clear idea of the nuts and bolts of the proposal. | Northern Territory chief minister, Adam Giles, would not comment until he had a clear idea of the nuts and bolts of the proposal. |
| “We need to see what’s the offer on the table,” he told Sky News. “What’s the quid pro quo?” | “We need to see what’s the offer on the table,” he told Sky News. “What’s the quid pro quo?” |
| The health minister, Sussan Ley, would not be drawn on the “frenzy of speculation” ahead of Coag, saying only that the states and commonwealth were “working cooperatively” to tackle increased expenditure in health care. | The health minister, Sussan Ley, would not be drawn on the “frenzy of speculation” ahead of Coag, saying only that the states and commonwealth were “working cooperatively” to tackle increased expenditure in health care. |
| Labor’s Ed Husic told Sky News the income tax proposal was a “Band-Aid” for health funding. “This is just an election fix that will create a tax mess.” | Labor’s Ed Husic told Sky News the income tax proposal was a “Band-Aid” for health funding. “This is just an election fix that will create a tax mess.” |
| The commonwealth is expected to offer $3bn more for hospital funding, but no extra cash for education, following the axing of billions of dollars of funding under Turnbull’s predecessor, Tony Abbott. | The commonwealth is expected to offer $3bn more for hospital funding, but no extra cash for education, following the axing of billions of dollars of funding under Turnbull’s predecessor, Tony Abbott. |
| Turnbull in February assured the states they would receive extra funding for hospitals, in direct contrast to comments made at the time by his treasurer, Scott Morrison, who said jurisdictions needed to manage their own budgets rather than expect a blank cheque from the commonwealth. | Turnbull in February assured the states they would receive extra funding for hospitals, in direct contrast to comments made at the time by his treasurer, Scott Morrison, who said jurisdictions needed to manage their own budgets rather than expect a blank cheque from the commonwealth. |
| The issue of vertical fiscal imbalance – that is, the difference in earning and spending capacity between the states and the commonwealth – will be high on the agenda when Turnbull hosts a dinner for chief ministers in Canberra on Thursday night, ahead of Friday’s Coag meeting. | The issue of vertical fiscal imbalance – that is, the difference in earning and spending capacity between the states and the commonwealth – will be high on the agenda when Turnbull hosts a dinner for chief ministers in Canberra on Thursday night, ahead of Friday’s Coag meeting. |