The Australian Local Government Association (ALGA) says it has raised the importance of taxation revenue at the local and regional level for Local Government services in its submission to the Taxation Issues Paper.

ALGA says councils nationwide rely on tax revenue for the provision of essential services and infrastructure, and allows the tier of government most connected to tax-payers to ensure their money is used beneficially.

The submission asserted the view that an analysis of revenue, including taxation and Local Government's taxation revenue power, cannot be done in isolation from the role of Local Government.

The tax review also cannot ignore Local Government’s role in the allocation of public functions, ALGA says.

ALGA flagged further critical issues including:

  • the constraints and restrictions that impinge upon local government’s ability to fully exploit its taxation base (ability to pay, capping, concessions, exemptions and the potential for state crowding out)
  • the critical role of intergovernmental grants from the Commonwealth and the states to the sector (both in the form of general purpose funding and specific purpose payments) in order to promote horizontal fiscal equity for all Australians
  • the role local government plays in raising some of the taxation revenue within a federalised taxation system

Submissions received in response to the Treasury Issues Paper are aimed at assisting the Treasury in the development of a Green Paper as part of the White Paper process.

That Green Paper is expected to be released for formal consultation with the community later in 2015.

ALGA’s submission is accessible here.