The Commonwealth Government’s recent proposal to withdraw wholesale sales tax exemptions for general purpose vehicles had the potential to cost Councils across Australia around $203 million. To meet this additional financial burden, Councils faced the prospect of increasing rates or reducing services.
With the State Governments also affected, the agreement thrashed out at the recent Premiers Conference to water down the proposal still leaves Councils financially worse off. According to the Municipal Association of Victoria, the partial loss of sales tax exemption could cost Victorian Councils between $8.5 and $30 million. This will be dependent upon the final definition of what constitutes ‘private plates’. The MAV is seeking urgent talks with the Premier, Treasurer and Local Government Minister.
“We will be asking the State to absorb the costs, so Victorian Councils will be no worse off this financial year,” said Cr Noel Bates, President MAV. “We are also examining some form of registration system, so Council vehicles can have the same benefits as enjoyed by State Government vehicles that use the red number plates.”
He said that Councils do not want to have to pass on the results of funding cuts and the partial loss of sales tax exemptions to their communities, when the State Government has the capacity to absorb the impact of the deal struck at the Premiers Conference.
“The way the sales tax situation has been handled demonstrates a need for a complete review of funding, the National Competition Policy, and taxation arrangements between the three spheres of government,” Cr Bates concluded.
In addition to the partial loss of sales tax exemptions, draft legislation currently before the New South Wales Parliament would result in Councils losing the ability to levy charges on gas companies that run their pipelines through public land.
“This will force Councils, particularly those in metropolitan areas, to find several million dollars to make up this shortfall in revenue,” said Cr Peter Woods, President NSW Local Government Association.
He said that at a time when Councils are bracing for the impact of funding shortfalls and cost increases in other areas, the State Government must rethink this approach.
