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No change to rates from tax reform.



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26 May 2000 M98/2000

NO CHANGE TO RATES FROM TAX REFORM

The Australian Competition and Consumer Commission’s estimation that rates would remain unaffected by tax reform was today supported by the Federal Minister for Regional Services, Territories and Local Government, Senator Ian Macdonald.

The ACCC’s price guide indicated that council rates would only change by between - 0.5% and 0% over the next six months with the introduction of the new tax system.

"Local Government rates, compulsory charges, licences and regulatory fees are all GST free, so there is no reason for rates to change due to tax reform," Senator Macdonald said.

"In fact, an independent study from Arthur Andersen, commissioned by the Victorian Government, showed that savings for councils would more than offset implementation costs, with a positive cash flow benefit accruing to the range of councils studied."

Senator Macdonald rejected claims that the savings have never been substantiated by any of the models developed in the lead up to tax reform implementation.

"Not only did Treasury’s PRISMOD model show savings from fuel excise reductions but it also indicated nationwide savings to local government in the order of $70 million each year from the removal of embedded hidden taxes," Senator Macdonald said.

"Subsequent to that, the Arthur Andersen report has been published and of course we now have the ACCC independently suggesting either no change or minor rate savings."

Senator Macdonald said that even the New South Wales Labor Treasurer, Michael Egan has stated that: ‘…Local Government also stands to be a major beneficiary in funding arrangements following the introduction of the proposed goods and services tax ."

"Of course there are a range of other factors that affect rates and it is a decision of each individual council to set rates based on the services they need to provide to their communities and to be accountable to their constituents for that."

"But what is clear from a range of models and studies is that if councils choose to put rates up, they can’t blame it on tax reform," Senator Macdonald said.

Media Contact: David Moore: (07) 4771 3066 / (0417) 774 724

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© Commonwealth of Australia 2000 Last updated:  Monday, 05 June 2000