Reducing Vertical Fiscal Imbalance in Australia: Is There a Need for State Personal Income Taxation?
AbstractTax reform is back on the economic and political agendas. Two significant reports to governments in 1996 have highlighted deficiencies in the current arrangements. First, the Australian Productivity Commission (1996) has submitted to the Howard Government that there is a need for fundamental tax reform, given the inappropriate incentive and efficiency effects of the existing tax system. Secondly, the Queensland Commission of Audit has argued more specifically that “the degree of vertical fiscal imbalance (VFI) in the Australian Federation is extreme and dysfunctional”. The Commission adds that accountability of both State and Federal Governments is blurred in consequence, thereby reducing fiscal responsibility. Recent High Court decisions on the definition of excise taxes add further significance to the need for economic analysis of, and political debate of, plausible changes to Commonwealth-State financial relations. While the overall tax reform debate focuses on the issue of broadening the tax base, one specific issue important to the debate is VFI and the possible reassignment of Commonwealth and State taxes. In this context we argue that a State personal income tax surcharge would facilitate a reduction in the extent of VFI, and thus promote a more efficient economy and effective federation. Various tax options for reducing VFI are considered, along with implications for public sector accountability and efficiency.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).
Volume (Year): 28 (1998)
Issue (Month): 1 (March)
Find related papers by JEL classification:
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- David Pickernell & Mark Mcgovern, 2002. "Begging Bowl Meets Baseball Bat? Lessons for the UK from the Australian Fiscal Model," Regional Studies, Taylor & Francis Journals, vol. 36(6), pages 703-707.
- Row, Richard & Duhs, Alan, 2001. "The National GST and Commonwealth-State Financial Relations: A Neglected Issue," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 31(1), pages 57-72, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Manuela Torgler).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.