Federal government considering a state income tax

Federal government considering a state income tax

The federal government is floating a proposal to allow states and territories to levy their own income taxes.

The plan is understood to let states and territories charge some income tax, using it to fund services, rather than rely on Commonwealth grants.

The proposal will be discussed at the next Council of Australian Governments meeting, which starts tonight.

Speaking to the ABC last night ACT Chief Minister Andrew Barr welcomed the idea, while his Northern Territory counterpart Adam Giles has also expressed his support for the idea.

“Income taxing powers would be part of a broader tax mix then for state and territory governments,” Mr Barr told ABC’s Lateline.

“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 you can certainly tax higher income earners more and have a fairer tax system as a result.”

But Shadow Treasurer Chris Bowen has slammed the move saying it will send the Australian economy backwards and put the onus of responsibility on state and territory governments.

“This is a Turnbull-Morrison fix that basically puts the responsibility of the $57 billion hospitals funding cut onto the states,” Mr Bowen said.

“A mangled Commonwealth-state income tax system goes in the opposite direction to decades of national economic reform and the development of a national marketplace connected to the world.”

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Amy Whittaker
Amy Whittaker 1402 posts

Amy joined the NRN team in August 2011, before graduating from a B of Arts (Communication-Journalism)/B of Sports Studies from Charles Sturt University in December 2011.

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