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$89m cut to WA’s GST share

THE Commonwealth Grants Commission has recommended an $89 million cut in Western Australia’s share of Goods and Services Tax grants. In the commission’s report on State Revenue Sharing Relativities 2006 Update, WA and Queensland will receive smaller shares of the GST pool in 2006-07 than they did in 2005-06. Treasurer Eric Ripper said this was a slap in the face for hard working Western Australians and businesses. “Western Australians have worked hard and as a result we have one of the best performing economies in the country,” he said. “In return, the CGC is cutting $89 million in grants funding, effectively rewarding poor economic management in other states.” Under the CGC’s equalisation formula, states with stronger growth in revenue capacity have their GST grant shares reduced in favour of states with weaker growth. The report says WA’s GST grant shares reduction was primarily due to the state’s revenue raising capacities from stamp duty on conveyances and mining revenue. “Its relative costs of providing services in government schools education, hospital inpatient services and mining, fuel and energy services also fell,” the commission said. Mr Ripper said recent claims that NSW and Victoria were subsidising WA just did not stack up. “Other states talk up their GST contributions, but stay quiet on the total picture,” he said. “If you take all Commonwealth taxes and revenues sourced from WA, less what is given back, we are net contributors to the federation of about $3 billion per annum. “This equates to about $1,500 for every Western Australian, more than double that of either NSW [$720 per capita] or Victoria [$520 per capita]. All the other states receive a net subsidy.” The commission said its latest review had “tracked a significant shift in the relative fiscal capacities of the states”. “Notable has been a strengthening of the capacity of Queensland and Western Australia,” it said. Despite the review’s findings, the commission estimated that WA’s share of GST revenue would still increase from $4.53 billion in 2005-06 to $4.76 billion in 2006-07. This was because of an overall increase in the GST pool and an increase in the state’s population. On a per-capita basis, WA is expected to receive $2,307 in 2006-07. NSW ($2,005) and Victoria ($2,056) will receive lower per capita grants, while other states and territories including Queensland ($2,351) will receive higher per capita grants.

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