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Minister Confirms Local Government rates to be GST-Free during Grey Electorate Talks



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Other Media Statements [Minister for Regional Development, Territories and Local Government] [ Minister for Transport and Regional Development]

[Michael Ronaldson, Parliamentary Secretary] [Departmental]

M e d i a

R e l e a s eTHE HON ALEX SC Minister for Regional Development, Territories and L S87/98 17 August 1998

MINISTER CONFIRMS LOCAL GOVERNMENT RATES TO BE GST-FREE DURING GREY ELECTORATE TALKS

The Minister for Regional Development, Territories and Local Government, Alex Somlyay, has applauded the Treasurer’s announcement of a new tax system for Australia, particularly the fact that local government rates will be GST-free.

The Minister will hold talks with local government councils in the Federal electorate of Grey. Alex Somlyay will be introduced during the day long visit by the Member for Grey, Barry Wakelin.

The new tax system, due to start in July 2000, will replace the existing taxation system introduced in 1930. A central component of the new system is a goods and services tax (GST).

Local government rates and charges for water and sewerage will not be subject to the GST.

The tax plan will also bring lower costs to local government. While local government is currently exempt from wholesale sales tax (WST), many goods purchased by local government have WST embedded in their prices. The abolition of the WST will remove these costs to local government.

Local government is expected to benefit by around $70 million each year by not paying WST and other embedded taxes such as Financial Institutions Duty and debits tax.

Local government will also benefit from the lower tax burden on diesel.

The GST will apply to local government commercial activities. This will ensure that local government does not have an unfair advantage over private enterprise:

Local government will collect GST on its business activities and will be entitled to claim input tax credits on all purchases.

The Commonwealth will be seeking the agreement of State and Territory and local governments to ensure that a consistent national approach is taken to taxing the commercial activities of all levels of government.

Local government will be a modest winner in financial terms under the new tax system and should also benefit from the States and Territories having a reliable revenue base.

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Further information:Graeme Hallet (Minister's Office) 02-6277 7060

http://www.dot.gov.au/media/somlyay/1998/s87_98.htm 16/10/1998