BEGGAR STATES?

AustraliaIf nothing else, the discussion emanating from the commission of audit and the lead up to the budget is starting to address some pretty big questions for Australia. This can’t be bad.

Not the least of these questions is if Australia is a federation, why do the states constantly cede their taxing powers to the federal government? Why do the feds collect the GST for them when they already have their own tax bases?

Maybe we should question the methods of the states. They’ve been granted certain taxing powers but they only want to use the least efficient of these, then stuff up land tax–the base that studies show to be the most efficient–by having a range of exemptions, thresholds, multiple rates, and aggregation provisions, in order to create a monster out of what land tax ought to be – that is, a base that is completely fair to everyone.

Maybe we need to re-visit federalism. Do we need it? Do we need the states? They’ve become too costly – and too supplicant to the feds. What’s their rationale today if they look to the central government for much of their support? Does Australia need beggar states?