Peter Costello

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States Better Off Under GST

NO.106

STATES BETTER OFF UNDER GST

GST revenue to the States and Territories for 2003-04 is estimated to be $32.457 billion dollars.

After just three years of The New Tax System, six States and Territories are expected to receive more revenue in 2003-04 than the Guaranteed Amount they would have received under the old tax system. Compared to Budget, the MYEFO estimates show that South Australia no longer requires Budget Balancing Assistance in 2003-04. When added to the five other States and Territories estimated at Budget to be better off in 2003-04 - Queensland, Western Australia, Tasmania, the Australian Capital Territory and the Northern Territory - these six States or Territories are estimated to be better off by some $575 million in 2003-04.

See the attached table for further information.

CANBERRA
8 December 2003

Contact: David Alexander
02 6277 7340


Forward estimates of Budget Balancing Assistance and States' gains from tax reform(a)

(a) Projections from 2004-05 will be affected by variations in Guaranteed Minimum Amount components, GST revenue growth and recommendations by the Commonwealth Grants Commission on the distribution of GST to each of the States and Territories in future years. See Budget Paper No 3 Federal Financial Relations 2003-04 for details of the Guaranteed Minimum Amount and the distribution of GST revenue among the States and Territories.

(b) In accordance with the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, Bank Account Debits tax is scheduled to be abolished by 1 July 2005. The revenue forgone by the States and Territories is included in each State's and Territory's Guaranteed Minimum Amount from 2005-06 to ensure the States are no worse off. Accordingly, the amount by which GST exceeds the Guaranteed Minimum Amount decreases in 2005-06 compared to 2004-05.

8 Dec 2003

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