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Victorian State taxes hurt low income families.



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MEDIA RELEASE Senator Amanda Vanstone Minister for Family & Community Services Minister Assisting the Prime Minister for the Status of Women

UNDER EMBARGO UNTIL 1:00AM 14th OCTOBER 2002

123.02

14th October 2002

Victorian State Taxes Hurt Low Income Families

The Bracks Government’s taxes and charges have an enormous impact on the budgets of low income households.

The cost of electricity, gas, car registration, public transport and insurance, are significant every day expenditures. Gambling taxes and conveyancing duties also influence the bottom line of household budgets. The attached Fact Sheets reveal the steady climb in state taxes and charges over the last decade. All of the increases shown are in real, not nominal, terms.

All of these costs hurt low income earners.

All of these costs are set by the Bracks Government.

I am urging the State and Territory Governments to consider the impact that their taxes and charges have on low income Australians.

The Bracks Government has become addicted to gambling revenue to fill up its treasury coffers. Despite this reprehensible windfall, it spends a token amount of this money trying to fix the problem.

Problem gamblers come from all walks of life but the addiction has a particularly savage effect on low income earners.

In 2000-01,Victoria had the highest gambling tax revenue per capita in the whole of Australia at $340 per person. Of course, many residents make little or no contribution to this gambling tax take and the individual costs bourne by problem gamblers are much higher.

Victorian gambling taxes have risen by $1.013 billion (or 160.8 per cent) in real terms since 1990-91. This means that in real terms, each Victorian is paying almost $200 more in gambling taxes.

Gaming machine taxes have significantly contributed to the overall Victorian gambling tax revenue, rising by an incredible 790.5 per cent over the nine years to 2000-01.

Low income earners in Victoria are shackled to their current homes because of the state’s high conveyancing duties. If a family needs to buy their first family home to accommodate a new baby, they are looking at conveyancing duties of over $15,000 for an average house. In contrast, a Queenslander can expect to pay an additional $2,200.

Victorian’s pay $4,306 more in conveyancing duty on an entry level home than a family in New South Wales, even though the entry level priced home in Victoria is $26,000 cheaper.

The Bracks Government received a tax ‘windfall’ of $1.3 billion in 2000-01 on the back of a strong Melbourne property market.

In fact, Victorian conveyancing duties have risen by $635 million (or 97.8 per cent) in real terms since 1991-92.

Insurance taxes make it even harder for low income families to ensure that their already limited assets are covered.

According to an independent survey by Deloitte Touche Tohmatsu, tax on household insurance in Victoria and NSW is among the highest in the world (as a percentage of the base premium).

For a Victorian country family a third of the cost of household insurance consists of state insurance taxes. This is money that many country families simply can’t afford.

Self funded retirees on low incomes should be aware that the Victorian Coalition has announced, that if elected in the upcoming Victorian State election, they will extend concessions on every day services to self funded retirees who are holders of the Commonwealth Seniors Health Card. These services include council rates, water and sewage rates, motor vehicle registration and electricity. Concessions which the Brack Government refuses to provide even though the Commonwealth has put on the Premier's desk an offer to fund 60% of the cost.

This analysis by the Department of Family and Community Services (www.facs.gov.au/ministers) using ABS data and other independent sources clearly shows that State and Territory Governments can make a big difference to the lives of low income Australians. It is now up to them to do something about it.

Minister’s Media Contact: Damon Hunt 0419 691 944

Attachment (Vic):

Gambling taxes

Gambling taxes tend to affect people on lower incomes the most, as gambling takes a greater share of their income.

Victoria had the highest per capita gambling tax revenue of $340 in 2000-01. This was followed by NSW ($259), South Australia ($243), ACT ($195), Queensland ($194), Tasmania ($170), NT ($159), and Western Australia ($92).

Victorian gambling taxes have risen by $1.013 billion (or 160.8 per cent) in real terms since 1990-91. In real terms, each Victorian is paying almost $200 more in gambling taxes.

Gaming machine taxes have significantly contributed to the overall Victorian gambling tax revenue, rising by 790.5 per cent over the nine years to 2000-01.

Conveyancing Duty

Conveyancing duty especially impacts on people with low incomes trying to buy into the entry level housing market.

Victorian first home buyers pay the highest effective conveyancing duty rate (4.1 per cent) of all States on a lower quartile priced house.

The average Victorian home buyer can expect to pay nearly $15,000 more to purchase a home compared to a Queenslander who can expect to pay an additional $2,200, due to state stamp duty tax.

Victorian’s pay $4,306 more in conveyancing duty on an entry level home than a family in New South Wales, even though the entry level priced home in Victoria is $26,000 cheaper.

The Victorian Government received a tax ‘windfall’ of $1.3 billion in 2000-01 on the back of a strong Melbourne property market.

Victorian conveyancing duties have risen by $635 million (or 97.8 per cent) in real terms since 1991-92.

Insurance taxes

Insurance taxes are regressive taxes because they affect low income people the most. High insurance costs and taxes have the potential to cause under-insurance among people in low incomes.

The household insurance tax rates were: Victoria (country) 51 per cent, (city) 41 per cent; NSW 43 per cent; Western Australia 41 per cent; South Australia 22 per cent; ACT 21 per cent; NT 21 per cent; Queensland 19 per cent; Tasmania 18 per cent; Germany 14 per cent; UK 5.5 per cent; Canada (Ontario) 3.5 per cent; US (California) 2.4 per cent; Ireland 2 per cent; and Singapore 2 per cent.

Concessions

Victorian households receiving income support are offered the smallest concession on electricity - a 17.5 per cent discount on the two quarterly winter accounts between May and November.

Victorian households paying municipal rates are also out of pocket. Households receiving income support are offered the lowest concession in the country - up to a 50 per cent discount but only to a maximum of $135 per annum.

Victorian households receiving income support are also offered the lowest concession on sewerage and water at $135 per annum.