QUEENSLAND Treasurer Andrew Fraser today announced tougher tax regulations that could collect the state an extra $30 million for flood recovery in the wake of $2.5 billion in writedowns.
Fraser says streamlining the collections system from quarterly to monthly will ‘simplify rules and reduce the scope for tax avoidance’.
"Queensland will abolish the existing land-rich duty regime which sees different tax rates applying depending on the proportion of land value in a corporate transaction,” says the Treasurer.
"The existing 60 per cent threshold is complex and provides incentive for companies to arrange transactions to avoid triggering tax obligations. We will move to adopt the system employed in other states to promote harmonisation and close off the potential for tax avoidance.
"This is not a revenue raising measure - this is about ensuring our system is robust and taxpayers can't avoid their obligations. Harmonising the system will reduce red tape and reduce avoidance.”
Losses in the key revenue areas of royalties and transfer duty will add a further deficit of around $1.5 billion to the state’s projected GST loss of $1 billion.
With the figures projected over the four year period before the next state budget, Fraser says royalty income would be hit hardest in 2011.
Discussions have already begun with the resources industry to implement the change, however the new rules will also limit tax avoidance in the housing market.
“The total taxation and royalty revenue write down across the forward estimates is projected to be more than $1.5 billion since the budget. That's put us more than $2.5 billion further behind the eight-ball, when you add on the $1 billion in reduced GST,” says Fraser.
"Royalties will take a bath - lost production and a rampant Aussie dollar have delivered a $286 million write down this year, before we make up ground from strong demand in the future.
"Our challenge is compounded by a large write down ($344 million) in transfer duty this year from a soft property market that will now take longer to recover.”
The Treasurer also announced that flood damage has wiped nearly 2 percentage points from previously expected growth; however the recovery effort will see a boost in construction.
"Our economy will take a hit. Growth excluding the impact of the floods was to be forecast at 3 per cent for this financial year - now it will be just 1.25 per cent,” says Fraser.
“The biggest hits will come in mining and agriculture, with tourism also facing losses. (But) while our economy will slow this year with lost production, the rebuilding activity will add fuel to the fire of strong investment expected to drive growth in 2011-12.”
The mid-year Economic and Fiscal Review released today revised growth for 2011-12 up to 5 per cent.
With 100,000 new jobs created from the flood recovery, Fraser says unemployment should drop to 5.25 per cent and create a skills shortage in the labour market.
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