Saturday, March 31, 2007

The Treasurer vs the treasurers

I've got this theory: That Australia's Treasurer invents a dispute at each of his annual meetings with Australia's state and territory treasurers in order to give the meeting something to talk about, to make it last, and to keep the press from writing about anything real.

See what you think. Here's today's (silly) story:

Australia’s eight states and territories have stood firm against a demand by the Treasurer that they abolish the last remaining tax in contention over the introduction of the GST.

Peter Costello yesterday asked his state and territory counterparts to honour what he said was an commitment to abolish stamp duty on business property conveyancing struck at the time of the introduction of the new tax system.

The state and territory Treasurers deny that there was such a commitment saying that they only agreed to consider abolishing the tax, that they did so last year and decided against it.

The ACT treasurer and chief minister Jon Stanhope said yesterday that abolishing it would cost his government $40 million which in the context of the ACT was “an awful lot of money”...

“None of us can make cuts of that order to our budget without dramatic
impacts on our capacity to deliver services,” he said.

Western Australia raised $600 million form the tax and South Australia $150 million.

At yesterday’s meeting Mr Costello told the treasurers that if they remained intransigent the Commonwealth would “consider its options” in relation to state financing.

“I wouldn’t call it a threat, but there was a not very subtle suggestion that the Commonwealth had ways and means,” said Mr Stanhope.

The Treasurer after the meeting that he would continue the discussions on a state-by-state basis and that one state, which he would not identify, had indicated that it was considering breaking ranks.

“Because they are all Labor States and the bulk of the Labor States don’t want anybody to break, there was a lot of pressure on the individual State concerned and so I won’t go into that,” he said.

Mr Costello said he would be prepared to consider offers from states or territories that want to abolish or reduce another tax in place of the stamp duty.

“If the States put forward the abolition of $2.5 billion of other different taxes we would be perfectly prepared to speak to them and to entertain such an offer, and we will deal with them on an individual basis,” he said.

“The Australian taxpayer was promised that in return for the introduction of GST, ten State taxes would be abolished. Eight Labor States and Territories today refused to cut taxes and in the room there was one person sticking up for the taxpayer and that was me,” he said.

Jon Stanhope said after the meeting that he could not understand the Treasurer’s suggestion that states substitute cuts in a different tax for the abolition of the tax the Treasurer said he opposed.

“I am suspicious of the complete lack of rigor in the process now with the federal Treasurer coming to a treasurer’s conference and saying that the Commonwealth is absolutely adamant that the states and territories must abide by what he regards as a deal struck at the time of the GST for which he insists he has a mandate, but then when the states say, we are not going to do that, he says well, take it from

”Is there some rigor in this tax reform that he is attempting to impose or not? He is essentially saying well I don’t care where it comes from - cut your tax. It doesn’t matter what it is, just cut it,” he said.

Despite spending much of Thursday claiming that the states and territories were hatching a secret plan to increase the rate of the GST, The Treasurer said nothing about it in his meeting with those treasurers.

“He was bashfully quiet,” said Mr Stanhope. “It wasn’t raised or mentioned.”