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Aust'n government's proposed income tax changes not to affect smaller states

Xinhua, March 31, 2016 Adjust font size:

Australian Prime Minister Malcolm Turnbull said on Thursday proposed sweeping changes to the nation's income tax system would not negatively affect the smaller states, after concerns were raised over larger states getting an "unfair" proportion of the tax money.

Talking to the Australian Broadcasting Corporation (ABC) a day after he announced a revolutionary plan to allow states to collect income tax instead of the federal government, Turnbull said smaller states would not be disadvantaged by the plan which would allow state governments to collect income tax from their residents.

"A fundamental premise of any reform like this would be that the smaller states could not be disadvantaged," Turnbull said Thursday.

But Greens leader Richard Di Natale joined a number of concerned politicians when he said the natural progression of such reform would lead to states such as Tasmania, which has a population of fewer than 1 million people, raising income tax levels in order to pay for things such as infrastructure, schools and hospitals.

He said at the moment, the states all got a fair share of income tax for projects of most need in each state.

"It will lead to this competition between states to cut taxes and make the revenue problem worse," Di Natale said overnight.

"We'll get this dog breakfast of different tax scales.

"You will get smaller states like Tasmania and other states who will find it hard to simply raise the revenue they need to fund essential services."

The prime minister will further discuss the proposed income tax changes with state leaders at the Council of Australian Governments (COAG) meeting later on Thursday. Endit