Professor welcomes taxing comments

Monday 29 May 2006

A Professor of Accounting at the University of Newcastle says a new report released today confirms that States are struggling to fund essential services.

Professor Scott Holmes from the University of Newcastle says the report, commissioned by NSW Treasurer Michael Costa, is a timely review of the Australian tax system.

"The report, by tax economist Dr Neil Warren, indicates that the States are stifled by a low revenue base, which doesn't match State funding obligations," says Professor Holmes.

"This will inherently push State budgets into deficit, if they are to properly support State services and infrastructure."

Dr Warren found that Australian States collect 16 per cent of total tax revenue, but are responsible for 40 per cent of total government expenditure.

"Often people ask why aren't the hospitals funded appropriately? Why are schools so run down? Why are regional areas so poorly serviced with infrastructure?," says Professor Scott Holmes.

"Dr Warren's report sheds some light on these issues. The Federal government collects 80 per cent of tax revenue, tells everyone what a great job it has done eliminating public debt, but has basically shifted the cost to individuals and the States.

"This is further compounded by the disproportionately lower level of GST funding to NSW and no consideration of the population profile of the State, which increasingly reflects an aging population."

For interviews: Professor Scott Holmes, Dean of Graduate Studies and Professor of Accounting, on 4921 8604.