Treasurer Eric Ripper has announced major reform proposals for the state tax system that are projected to deliver an extra $80-100 million in revenue, but said the government would adopt offsetting tax cuts so the package was revenue neutral.
Treasurer Eric Ripper has announced major reform proposals for the state tax system that are projected to deliver an extra $80-100 million in revenue, but said the government would adopt offsetting tax cuts so the package was revenue neutral.
The reform proposals comprise three major initiatives, which Mr Ripper said would only be accepted as a package.
"Unfortunately it has to be all or nothing," he told a Taxation Institute of Australia breakfast.
The proposed reforms represent a substantial simplification of the Stamp Act, which would be reduced from 400 pages to 200 pages.
Mr Ripper claimed the result would be "one of the most business-friendly Stamp Acts you will see in Australia".
They also represent a broadening of the tax base, hence the prediction that revenue would increase by an estimated $80-100 million if there were no changes to tax rates.
Mr Ripper emphasised that the reforms were designed to be revenue neutral, with offsetting cuts coming through either rate reductions or threshold increases.
"The government is not looking to make extra money. It will be revenue neutral."
The proposed changes include the introduction of a 'landholder' regime which would impose stamp duty on virtually all transactions where land worth $2 million or more was acquired through a company or unit trust.
Currently some of these transactions are covered by the 'land rich' provisions, but there is a lot of uncertainty about the applicability of stamp duty.
The 'land rich' provisions were originally designed to stop tax avoidance but in practice they mean that many companies, including mining companies, are subject to stamp duty when they make an acquisition.
The package includes a broadening of concessions so that stamp duty does not stop companies adopting a more efficient ownership structure.
Mr Ripper said this proposal was "not without risk", therefore the government has proposed the introduction of a general anti-avoidance provision.
Commissioner of State Revenue Bill Sullivan said this provision would target tax avoidance schemes that were "artificial, blatant and contrived", and would be exercised in a "very considered manner".
Mr Ripper said the propsals constituted an exposure draft and were not government policy. The government is seeking business feedback on the proposals.
The changes were developed by state treasury after consultation with an expert committee comprising BDO Kendalls director Peter Moltoni, Mallesons Stephen Jaques partner Graeme Cotterill and tax barrister Grahame Young.
The Treasurer's announcement is pasted below"
Treasurer announces final plank in tax reform process
9/8/07
Treasurer Eric Ripper today set in motion the final stage of a seven-year reform process designed to improve the efficiency of Western Australia's taxation system.
Speaking at a breakfast hosted by the Taxation Institute of Australia, Mr Ripper launched a consultation process seeking public comment on an exposure draft of the rewritten Stamp Act.
"The rewrite of the Stamp Act is the final part of a process that has seen significant improvements in the operation of the statutes that collectively raise more than $4billion in revenue for the community," Mr Ripper said.
"Today is an important day in the State's taxation history. Not only are we looking to rewrite an Act that is nearly 90 years old, we are also seeking to improve the operation of this duty through a number of reforms."
The Treasurer noted that as well as delivering on recommendations in the State Tax Review, the exposure draft contained proposals that:
reforms the duty base through a new landholder regime which imposes duty in a more consistent and easily understood way on land acquired through interests in companies and unit trusts;
broadens the concessions available to businesses that own Western Australian assets to allow more efficient structures to be adopted, where currently stamp duty prevents this occurring; and
increases protection of the revenue base by the introduction of a general anti-avoidance provision.
"These measures represent a fundamental reform of our tax system that will put in place, in this State, a fairer and more efficient taxing regime," he said.
"In doing so, the exposure draft will also be easier to understand through a more contemporary drafting style and a more coherent structure.
"The legislation has also been slashed in half from 400 pages to about 200 pages."
Mr Ripper said that subject to comment through consultation and Cabinet endorsement, he hoped to introduce the legislation into the Western Australian Parliament later this year, with a view to it being in place by the start of next July.
Consultation runs from today and closes on September 21. Copies of the exposure draft of the legislation and associated explanatory notes, along with details of the consultation process are available on the Department of Treasury and Finance website at http://www.osr.wa.gov.au
