Fed: Costello and SA home owners get tax victory

AAP General News (Australia)
04-16-2005
Fed: Costello and SA home owners get tax victory

By Shane Wright, Economics Correspondent

CANBERRA, April 16 AAP - Treasurer Peter Costello and South Australian home owners
have had their first major victory in the battle between Canberra and the states over
indirect taxes.

South Australian Premier Mike Rann agreed to Mr Costello's demands for state tax reform
by revealing stamp duty on mortgages would go from next year, with other duties to be
phased out over the coming three years.

It follows a concerted campaign by Mr Costello to force the states and territories
to dump a raft of indirect taxes in return for GST revenue.

Mr Rann denied caving in and said the move would save South Australian taxpayers more
than $70 million a year once fully implemented.

"This is actually in advance of what Peter Costello asked for," he told ABC radio.

"We have decided as a government to back business.

"We've decided as a government to give relief to home buyers and most of all this is
about giving economic growth, continuing to grow, and it's about taking the brakes, taking
the leash out of our economy."

Mr Costello had trouble containing his happiness at the decision, saying all other
states that had failed to dump stamp duty should now follow suit.

"This of course is one of the taxes that was slated for abolition as part of the introduction
of the GST," he told reporters.

"The states are clearly in the financial position now where they can abolish those
nine taxes and they include stamp duties on mortgages."

The treasurer said the pressure was now on the other states, including those such as
NSW which are holding out, to follow South Australia's lead and ditch their taxes.

Mr Costello also signalled support for simplification of tax laws, although the timing
of such simplification is still unclear.

But instead of hacking into new laws, Mr Costello said ditching the 1936 Income Act
- which stil sits aside the 1997 Act - would be one way of dramatically slicing red tape.

"A whole part, maybe half of the 1936 Act is never used, it is totally inoperative,
it does not apply to anybody," he said.

"And if it is never used, it is totally inoperative, it does not apply to anybody,
we can repeal it."

Mr Costello said up to 30 per cent of tax laws could go just by removing cross references
between the 1997 and 1936 acts, and then ditching the older legislation.

AAP sw/sd

KEYWORD: TAX NIGHTLEAD

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