Mar 302007
 

Just how close are we to a federal election? This question occurred to Bannerman earlier today while toiling away, listening to ABC News Radio in the background. He noted two articles in particular, both of which featured that ever-lovable Treasurer, Peter Costello.

Treasurer Peter Costello has called on Australia’s consumer watchdog to monitor petrol prices in the lead-up to the Easter long weekend and school holidays.

and this one, which provided the ’incredibly arrogant’ Costello, as described by one state treasurer after today’s meeting of bean counters, a stage upon which to perform to his utmost in the political sense.

From this mornings ’doorstop’:

"Well, I look forward to the Intergovernmental Finance Ministers’ Meeting today which will be distributing between the States record amounts of GST, $41.8 billion, including this year, for the States, a $3.3 billion windfall. Now with record amounts of GST being distributed to the States, plainly the reduction of other indirect taxes as agreed between the Commonwealth and the States can and should proceed."

Do take note, reader, of the emboldened text. Now this from the conference following today’s meeting:

"There is still one additional tax identified in the Intergovernmental Agreement which should be abolished. Today I asked the State Governments to abolish Stamp Duty on business real property conveyances, and if these States were to do that they have sufficient head room under the bonus or windfall that they are currently getting from the GST. …..~None of the States have agreed to the abolition of that tax……~Unfortunately, the States would not agree to cut taxes. Not even the taxes that have been identified as part of the GST deal. As far as the Commonwealth is concerned we will not give up, we will not let the taxpayer down, we will continue to insist on this and we will now negotiate with individual States on any counter offer that they bring forward."

Again, note the emboldened text. Now, the following which comes directly from the Federal Parliamentary Library, Research Brief no. 11 2005-06.

Table 6: Timetable for the abolition of stamp duties

Tax

VIC

QLD

SA

TAS

ACT

NT

Non-quotable marketable securities

1 July 2002

1 Jan 2007

50% 1 July 2009; 100% 1 July 2010

Already abolished

1 July 2010

1 July 2006

Leases

1 Apr 2001

1 Jan 2006

Already abolished

1 July 2009

1 July 2006

Mortgages, bonds, debentures, and other loan securities

1 July 2004

50% 1 Jan 2008; 100% 1 Jan 2009

33.3% 1 July 2007; 66.6 % 1 July 2008; 100% 1 July 2009

50% 1 July 2006; 100% 1 July 2007

Abolished 1 Sep 1987

Already abolished

Credit, instalment purchase, and rental arrangements

1 Jan 2007

a 1 Jan 2006; 1 Jan 2007 b

33.3% 1 July 2007; 66.6 % 1 July 2008; 100% 1 July 2009

Already abolished

1 July 2007

1 July 2007

Cheques, bills of exchange and promissory notes

Not imposed

Abolished 1 Jan 1994

Abolished 1 July 2004

Abolished 1 Jan 1985

1 Sep 1987

Already abolished

Business non-real property conveyances

Not imposed

50 % 1 Jan 2010; 100% 1 Jan 2011

50% 1 July 2009; 100% 1 July 2010

1 July 2008

1 July 2006

1 July 2009

Sources: ACT: Budget Paper No. 3, 2005-06, p. 8; NT: Budget Paper No. 2, 2005-06, pp. 36 and 64; QLD: Budget Paper No. 2, 2005-06, p. 81; SA: Budget Paper No. 3, 2005-06, p 3.5; TAS: Budget Paper No. 1, 2005-06, p. 111; VIC: Budget Paper No. 2, 2005-06, p. 79; NSW Treasury, Interstate Comparison of Taxes 2005-06.

Notes: a credit business duty; b hire duty.

These are the taxes agreed to by the states following a 2005 review of state taxes as those which they would abolish in terms of the timetable above.This review was originally incorporated into the Intergovernmental Agreement Costello is on about. As you, reader, will note when you visit the link, several states have either flatly refused to abolish some or all; or adopted their own timetable for abolition contra to the Intergovernmental Agreement. That aside, the tax which Costello today demanded the States abolish, in NOT a part of the Intergovernmental Agreement, but merely one of several subject to review. Quoting again from the abovementioned research paper:

The review took place at the Ministerial Council meeting (also called the Treasurers’ Conference) on 23 March 2005. The Commonwealth Treasurer, the Hon. Peter Costello, contended that the intent of the Agreement is that the duties should be abolished and proposed the following timetable for abolition:

  • on 1 July 2006, the abolition of duty on non-quotable marketable securities; leases; mortgages, bonds, debentures and other loan securities; credit arrangements, instalment purchase arrangements and rental arrangements; and cheques, bills of exchange and promissory notes, and
  • on 1 July 2007, the abolition of duty on business conveyances other than real property (land).(9)

The Treasurer also proposed that the duty on business conveyances of real property cease from a date to be determined by the Ministerial Council on the basis that no state would be worse off in any year. To encourage the states to adopt these proposals, the Treasurer further proposed extending the transitional period for the guaranteed minimum amount for another two years, that is, from 30 June 2006 to 30 June 2008.(10)

The Treasurer argued that the states could afford the proposals on the grounds that they would be better off even after abolition. According to the Treasurer, the gains to the states-that is, the excess of their GST entitlements over their guaranteed minimum amounts-over the five years from 2005-06 will be about $16 billion while the revenue the states forgo would be $8.8 billion, leaving them better off by about $7.5 billion.(11)

The states rejected the Commonwealth’s proposals. However, the Commonwealth agreed to consider a counter-proposal from the states. On 20 April 2005, the states-except NSW and WA-submitted a proposal that commits them to abolish, by no later than 1 July 2010, duties on non-quotable market securities; leases; mortgages, bonds, debentures and other loan securities; credit, instalment purchase, and rental arrangements; and cheques, bills of exchange and promissory notes.

With regard to business conveyances, the same states proposed the retention of duty on conveyances of real property but the abolition of duty on other (that is, non-real property) conveyances, for example, goodwill and intellectual property. Victoria, for example, does not support different treatment of residential and business real property and so supports retention of stamp duty on the latter.(12) The main reason for the position with respect to real business property conveyances is that this duty is a major source of revenue.

So, we see that what Costello stated today is not the fact of the matter. In fact it’s as far from the real facts as Costello could reach without telling straight out, bare-faced lies. Bannerman would call this one a ’porkie’, which equates to a lie, but one told by a politician, so it’s more or less anticipated to be not the truth. Now, it’s interesting to note that the States are making counter claims against Costello, urging him to cut company tax. This is an extremely unlikely occurrence as company tax is where the Commonwealth derives it’s main source of revenue, especially now during the resources boom. This brings the B-man back to the subject at hand. Judging from the increasing incidence of political thrusts and parries, are we close to an election date being nominated, or is this increasing incidence merely the opening gambits from both major parties in a bid to influence/suck in the gullible voters in the electorate? This latest splashing out with the heavily loaded political broadbrush seems to be aimed squarely at the Mum-and-Dad voters. Costello doesn’t really care if the States abolish tax on non-residential conveyancing. It’s a minor event in the grand scheme, in fact, given the states effectively told him to shove the suggestion in 2005, trying his arm again less than two years later more or less shows this punt up for what it is. A furphy. He’s really after a tussle. A spite-filled tilt at the all-labor states and territories with the ultimate outcome intended to be a negotiated compromise whereby the States will offer up what he’s really after…..abolition of residential conveyancing taxes. How good will he, and by default the coalition, look in the run-up to an election? Taxes on owner-occupied and residential investment real estate being wiped away, and all thanks to the fighting spirit of the Australian saviours, the Howardian coalition.

The reader will have to excuse the Bannerman’s cynicism, but quite seriously, this kind of behaviour is transparent. So…..just how far off are we?