Nicholls outlines his vision for tax reform

ABOLISHING inefficient taxes such as the payroll tax in exchange for a little Commonwealth help should be a part of the much needed finance reform, the Queensland Treasurer believes.

A day after meeting with state treasurers in Sydney, Queensland Treasurer Tim Nicholls outlined his vision for tax reform at a Queensland Media Club event on Friday.

He said Australian Government spending was expected to rise by 6.5% more than its revenue by 2044-2045, which posed a significant challenge to states considering the Federal Government was the major health provider.

"We will have to go cap in hand more often for more to Canberra," he said.

The Asia White Paper released last month recommended state governments identify ways to phase out their inefficient taxes and find better use of their efficient tax bases - a proposal Mr Nicholls is all for.

"The reality is the abolishment of inefficient taxes, such as stamp duties, would represent a multi-million-dollar loss of revenue for the states," he said.

"Unless services are to be slashed, which no one wants to do, the loss of state taxes would have to be compensated by access to new revenue sources.

"The Commonwealth receives about 80% of tax revenue raised Australia-wide but they only have 60% of the spending obligation.

"We are prepared to forgo some of our taxes in exchange for a portion of the increase in income taxes where bracket creep comes through."

Mr Nicholls pinpointed "inefficient taxes" as the payroll tax, high land tax and property transfer duty.

"Taxes that basically hinder investment and movement of business and capital," he said.

"Things such as transfer duty on property are regarded as inefficient taxes.

"Payroll tax is widely loathed the way it is currently applied as an inefficient tax because it prevents people from employing more.

"High land tax and high transfer duty rates stop people making proper decisions for where the want to set their business up and to make it based on tax decisions rather then business decisions."

A similar proposal was flagged at the treasurer's meeting in Sydney but dismissed without proper consultation by the Federal Government, Mr Nicholls claimed.



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