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Reforming Tasmania’s state tax system: some options

Goods and services tax Tax reform Taxation Tasmania

Tasmania’s state tax system contributes a smaller proportion of the revenue required to fund the public goods and services provided by the state government than that of any other state or territory except the Northern Territory – as a result of which, Tasmania’s public finances are more exposed to factors beyond the control of the Tasmanian Government (in particular, changes in the total amount of revenue from the GST and the way it is distributed among the states and territories, and in the conditions attaching to other grants from the Commonwealth) than any other jurisdiction (except the NT).

The report proposes reforms in three areas of Tasmania’s state taxation system:

  1. Replacing stamp duties on the transfer of land (conveyance duty) with a broadly-based land tax, levied at progressive rates on the per-square-meter value of individual land holdings, with no exemption for owner-occupied housing but with transitional provisions to avoid ‘double taxation’ and deferral provisions to cater for people who may be ‘asset rich but income poor’ (such as retirees and pensioners);
  2. Lowering the rate and broadening the base of payroll tax, by substantially reducing the threshold at which employers become liable to payroll tax, and providing exemptions for new businesses; and
  3. Re-introducing estate duties which were abolished in Tasmania in the late 1970s, but structuring them so that less than 10% of all estates would be liable to pay them, and giving those who would be liable to pay them the option of reducing or eliminating entirely their liability by making gifts or bequests to Tasmanian charities and not-for-profit institutions.
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