Article: Asset sales touted to cut tax

[ozbob]

From the Brisbanetimes click here!

Asset sales touted to cut tax

Asset sales touted to cut tax
Daniel Hurst
January 17, 2012 - 3:00AM

The Institute of Public Affairs has called for the privatisation of Queensland's electricity infrastructure.

Queensland's major political parties say they have no plans to pursue privatisation, despite a call by a free-market think tank for another round of asset sales after the next election.

The Queensland government yesterday dismissed a report suggesting the state's tax competitiveness lagged behind that of other resource-rich regions, as the economy shaped up to be centre stage in the coming election campaign.

A pro-free-market think tank, the Institute of Public Affairs, used its report to call for privatisation of electricity infrastructure and the franchising of public transport services and water supply to be considered.

The IPA report ranked Queensland as fourth out of the eight states and territories when it came to boasting the lowest state tax liability for a hypothetical business earning $5 million profit a year.

The fictitious business, with 60 employees, would pay $283,937 in state taxes in Queensland including payroll tax, land tax and transfer duty, and insurance and motor vehicle duty, according to the IPA report issued yesterday.

The same business would pay the lowest tax if located in the Northern Territory ($225,729), the second-lowest tax if based in the other resource-rich state, Western Australia ($273,523), and third-lowest in Victoria ($273,581), the report said.

Queensland, traditionally seen as a low tax state, would impose a lower tax burden on the hypothetical business than those remaining on the list: Tasmania, New South Wales, the Australian Capital Territory and South Australia (the latter of which was ranked the worst with a tax impost of $299,703, eight per cent above average).

Deputy Premier Andrew Fraser yesterday dismissed the report, saying Queensland tax per capita was $2271, compared with an average of $2711 in other states.

"The facts show that Queensland has one of the country's most competitive tax regimes – with Queenslanders taxed around $440 per person less than the national average," he said.

Mr Fraser also pointed to a 2011 report by an accountancy firm, Pitcher Partners, which found Queensland was the most favourable state when looking at the first full year of taxes for two hypothetical companies setting up in five states.

However, IPA research fellow Julie Novak last night said whichever party won the imminent state election should look at further asset sales and spending cuts to deliver lower tax rates.

Ms Novak said privatisation of electricity infrastructure should be considered, along with concepts such as franchising of public transport services and water supply.

"I think really anything in government hands should be up for scrutiny," she said.

Both the Labor government and Liberal National Party opposition have downplayed the prospect of asset sales after the looming election.

LNP leader Campbell Newman last month pledged to focus on managing government costs and said he would need to make some tough decisions, but insisted the party had not discussed asset sales and had no plans to do so.

"Our commitment to people continues to be that we would only contemplate asset sales after telling people upfront, prior to an election, that we were going to contemplate that," he told brisbanetimes.com.au.

LNP treasury spokesman Tim Nicholls said last night: "There is no change to the previous position as outlined by Campbell in December."

In May 2011, Finance Minister Rachel Nolan said the government had no plans to pursue further privatisations.

The privatisation of five assets, announced in the 2009 budget and which included the floating of coal freight business QR National on the sharemarket, delivered about $15 billion.

The LNP yesterday slammed the government over its economic management, saying it was exactly three years since Mr Fraser promised to keep the fuel subsidy, and accusing Labor of inflicting hip-pocket pain.

However, Mr Newman last week ruled out reintroducing the fuel subsidy, citing budget pressures.

Mr Fraser yesterday defended the state's economic management as both parties prepared for a looming election.

"Under the proven leadership of Anna Bligh, we delivered jobs during the global financial crisis, we are delivering a massive recovery and reconstruction effort after the natural disasters, and now we're delivering a surplus one year ahead of schedule," Mr Fraser said.

"We also have the lowest payroll tax rate in the country and the highest threshold of the mainland states."

The LNP has pointed out the state is on track to reach $85 billion in debt, equating to $100 million a day in interest repayments, and promised to rein in borrowings.

But Mr Fraser said net debt per capita on the general government budget was negative $693.

On Twitter, Mr Fraser suggested the IPA was partisan and pointed out that the IPA helped form the Liberal Party in the 1940s.

However, Ms Novak said while the IPA's background was a matter of historical record, the group had "absolutely no relationship with the Liberal Party of Australia".

The IPA report says the average state and territory tax for its hypothetical business was $277,913, about 18 per cent of the amount it would pay in federal corporate income tax.

The report acknowledges that "the reference business is not necessarily representative of the business population from a statistical perspective", but says it accounts for reasonably commonplace business characteristics and activities.

Ms Novak said the business details used for comparison purposes were based on those used in the World Bank's Doing Business project.

[mufreight]

If the government sells off an asset it loses the revenue from that asset then the purchaser seeks to make a return on their investment so we end up paying more for the services provided by that asset so the new owner can show a profit.

If a private operaor can operate an asset in such a way as to make a profitable return on an asset why can government not operate the asset in the same manner and return the profit to the taxpayers of the state either by improved services or lower charges?

[somebody]

If a private operaor can operate an asset in such a way as to make a profitable return on an asset why can government not operate the asset in the same manner and return the profit to the taxpayers of the state either by improved services or lower charges?

Bureaucracies have a great deal of difficulty in dealing with incompetent or unproductive employees.