The State Government has pledged to focus next year’s budget on increased community spending and infrastructure investment ahead of the tax cuts demanded by Federal Treasurer Peter Costello.
The State Government has pledged to focus next year’s budget on increased community spending and infrastructure investment ahead of the tax cuts demanded by Federal Treasurer Peter Costello.
The upcoming State Budget is being framed amidst uncertainty over federal grants, after WA and NSW were the only states to resist a federal push for tax cuts.
Mr Costello has argued that the states can afford to abolish taxes and charges because GST revenue, which flows to the states, has grown faster than had been expected.
Premier Geoff Gallop claims this is part of a wider federal campaign to increase influence over the states, including in industrial relations.
State Treasurer Eric Ripper said this week the 2005-06 budget, to be delivered on May 26, would deliver all of Labor’s election commitments.
“Our top priorities will be to deliver on our election commitments and to invest in key infrastructure while providing a better deal for families through initiatives such as the new Education Allowance, lower fares for students, $25 off motor vehicle registrations, and abolition of debits tax,” Mr Ripper said.
The scrapping of debits tax was a long-standing commitment and was separate from the federal push, which targeted the abolition of mortgage duty, rental duty and stamp duty on non-real property conveyances.
The phased abolition of these stamp duties would cost the state about $210 million per year, which the Federal Government says would be more than outweighed by the GST windfall.
Chamber of Commerce and Industry chief executive John Langoulant said the proposed cuts were “entirely manageable within the state’s current budget plan”.
In a pre-budget submission, Mr Langoulant called on the Government to restore “more responsible growth in its expenditures to ensure more sustainable surpluses and the competitive tax outcomes necessary to secure the state’s future”.
He said the need for tax cuts was highlighted by WA having the second-highest business tax take per capita, after NSW.
CCI’s key priorities are to see payroll tax reduced to 5 per cent, stamp duty reduced across the board, and the abolition of stamp duties earmarked for review under the GST agreement.
Mr Langoulant also said the budget surplus must be increased from the levels forecast in the February state election campaign.
Those forecasts show the budget surplus falling from a record $799 million in 2003-04 to $469 million in 2004-05.
Mr Ripper has stated the Government is now aiming for a bigger surplus, as state revenue is boosted by higher oil prices, rising mineral production and a solid housing market.
The forecasts also show the surplus shrinking to $187 million in 2005-06 and about $100 million in future years.
Acting Under-Treasurer Colin Murphy said before the election that the forecasts “are generally consistent with the current financial targets” but “remain relatively slim in the context of a $13 billion annual budget”.
STATE BUDGET
- State budget to be delivered on May 26.
- 2004-05 surplus expected to exceed $469m.
- Government to focus on spending initiatives.
- Rejects federal push for stamp duty cuts.