Delivering further tax reform
Under the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, all the States and Territories committed to abolish the bank account debits tax, subject to review by the Ministerial Council for Commonwealth-State Financial Relations. At the March 2004 Ministerial Council meeting, the Australian Government and State governments agreed to abolish bank account debits tax by 1 July 2005.
The abolition of this tax continues the implementation of the reforms contained in the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, signed by Australian Government and all State and Territory leaders in 1999.
The Australian Government’s tax reforms made it possible to abolish this narrow and inefficient tax. The abolition of bank account debits tax is expected to directly save taxpayers around $1 billion each year.
The Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations also provides that the Ministerial Council will, by 2005, review the need to retain stamp duty on the following:
- non-residential conveyances;
- non-quotable marketable securities;
- leases;
- mortgages, bonds, debentures and other loan securities;
- credit arrangements, instalment purchase arrangements and rental arrangements; and
- cheques, bills of exchange and promissory notes.
The Ministerial Council committed to this review at its March 2004 meeting and will consider the review at its March 2005 meeting.
First Home Owners Scheme Eligible home buyers have received over $4.4 billion through original and additional First Home Owners Scheme grants since July 2000. The First Home Owners Scheme, introduced on 1 July 2000, is funded out of GST revenues and guaranteed by the Australian Government through Budget Balancing Assistance. The scheme provides all eligible first home buyers with a $7,000 grant. The States administer the scheme which has provided over 568,000 grants. The Scheme is ongoing and its cost to the States is part of the Guaranteed Minimum Amount (Tables 11 and 12). In March 2001, the Australian Government made an additional $7,000 grant available to first home buyers building or purchasing new homes before 31 December 2001. The Australian Government fully funds the additional First Home Owners Scheme with a Specific Purpose Payment through the States to meet the cost of grants. The Australian Government extended the additional First Home Owners Scheme at a rate of $3,000 for new homes built or purchased between 1 January 2002 and 30 June 2002. To date, the additional First Home Owners Scheme has provided around 69,000 grants to eligible home buyers. Although the additional First Home Owners Scheme has ended, grants continue to be paid to eligible applicants due to the time needed to complete construction and the one-year period allowed to lodge an application, once construction is complete. Estimates of payments are shown in the Specific Purpose Payments tables (Appendix B). |