Tax offset should not be abolished
The Productivity Commission’s recommendation that the zonal tax offset (ZTO) should be abolished is simply wrong. The policy is vital to improving the economic conditions of regional Australia and should be updated to reflect the needs of communities.
In its submission to the Inquiry into Remote Area Tax concessions and Payments the LGAQ says there is evidence that Zonal Tax Offsets are a tangible path to growth in regional areas. But the submissions stresses that the offset has suffered from a lack of attention.
“There is a widespread expectation by communities and local governments in remote areas that the policy commitments indicated in the Northern Australia White Paper, to be implemented by the Office of Northern Australia, will improve the conditions for economic development, including achieving investment and workforce attraction.”
“…there has been a lack of maintenance of the policy mechanism over many decades. The effect of this has seen the real value of the incentives reduced to levels that can only be described as ineffective in terms of their ability to support the policy objective.”
In a statement, the Productivity Commission said after consultation with communities and businesses across Australia it is their assessment that the tax offset is no longer in line with contemporary Australia,
“The Commission's assessment is that the ZTO should be abolished. Remote Australia has changed considerably since the ZTO was introduced in 1945. Some eligible areas, like Cairns, Townsville and Darwin, are no longer remote. And the ZTO has little influence on where people live or work.”
More >> Hear Craig Johnstone (LGAQ Media Executive) and Roland McMillan (LGAQ Lead - Economics and Finance) breakdown the importance of tax concessions for remote areas and the LGAQ's submission to the Productivity Commission Inquiry in the podcast below.
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