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Business joins govt in defending NSW slice of GST pie

02 October, 2009

NSW’s largest business organisation, NSW Business Chamber, has joined the NSW Government, and other industry and community groups, in an open letter calling on the Commonwealth Grants Commission to reconsider its proposal to strip NSW of nearly $2 billion in GST revenue over the next three years.

As part of the 2010 state revenue sharing review, the Commonwealth Grants Commission has proposed to change the GST formula to provide additional GST revenue to Queensland for infrastructure at the cost to NSW of nearly $2 billion.

“The Grants Commission has created a reverse ‘Robin Hood’ formula – robbing the struggling states of NSW and Victoria to pay the resource rich state of Queensland,” said Stephen Cartwright, CEO of NSW Business Chamber.

“These proposals by the Commission will make the GST formula even more complex, and will result in even greater pressure on NSW during these tough economic times.

“The 2010 review is an opportune time to simplify the GST formula and make it fair – not make it more complicated.  We call on the Grants Commission to work in partnership with NSW to ensure our state gets its fair share.”

Cartwright said that higher urban densities in NSW, particularly in Sydney, made the delivery and maintenance of infrastructure more expensive than in other states and that this should be taken into account in distributing GST revenue.

“NSW is a $350 billion economy and represents one third of the national economy.  A $2 billion cut in the State’s GST allocation will have a significant impact on the capacity of the State to deliver on planned tax cuts and investment in infrastructure.”

Tax reform will be a key topic of discussion tomorrow at NSW Business Chamber’s “Reducing the Burden on Business” symposium at the Sydney Hilton Hotel as part of its NSW – Reclaiming 1st campaign.

Former NSW Treasurer, Michael Costa, and Australian Financial Review Economic Editor, Alan Mitchell, will lead the tax reform debate, and Productivity Commissioner, Angela MacRae, and Standards Australia Deputy CEO, Colin Blair, will debate cutting red tape.

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