Call to scrap rural concessions
The Federal Government has rejected the Productivity Commission’s call to axe a special tax concession for people living in remote parts of Australia.
The Productivity Commission this week described the concessions as outdated, inequitable and poorly-designed.
But Assistant Treasurer Michael Sukkar will not do anything about it.
The report reviewed the zone tax offset, remote area allowance and remote area concessions for fringe benefits tax on people and businesses in remote areas.
It said the Zone Tax Offset (ZTO), a near-$300-a-year payment to compensate the higher cost of living in remote areas, should be scrapped.
The move would have saved the Federal Government about $150 million a year, with the commission arguing that the concession was “poorly targeted”. Official stats show almost half of the claimants live in large cities such as Townsville, Cairns, Darwin and Mackay.
It also called for the government to re-think the Regional Area Allowance for income support recipients.
It also proposed changes to Fringe Benefits Tax remote area concessions, saying the government is forgoing up to $390 million in tax revenue a year because employer-provided housing is exempt from Fringe Benefits Tax. It said this should be reduced to only a 50 per cent concession.
It was this last measure that generated the most angst in remote areas.
Queensland LNP Senator Susan McDonald said the concessions are hugely important to regional Australia.
“The Fringe Benefits Tax concessions are crucial for businesses in remote and rural Australia who provide accommodation to employees as part of their salary packages,” she said in a statement.
“Without these concessions, small outback businesses will not be able to attract workers.”
State Labor Member for the Pilbara Kevin Michel said the recommendations would be “a kick in the guts for regional residents”.
“I'm totally disappointed with the Productivity Commission report. People don't seem to understand the cost of living up here in the Pilbara.
“It recognises the current zone allowances aren't working properly and the inequalities that we face living in the region need to be fixed.
“But at the same time it recommends abolishing the tax rebate, rather than trying to fix these inequalities.
“The Commission should actually be asking for more tax concessions for people living in the Pilbara.
“Living up here is not easy.”
WA Regional Affairs Minister Alannah MacTiernan said the fringe benefits tax housing exemption is needed to attract workers.
“The Pilbara is a major generator of wealth for the entire country and the fringe benefits tax exemption is indeed one of those things that is at least helping to create some balance, and going part way to addressing the problem of fly-in fly-out [workers],” she said.
Assistant Treasurer Michael Sukkar has issued a statement saying all the scheme will remain in place.
“Were they to be implemented, the Productivity Commission's recommendations would result in significant disruption to existing arrangements,” he said.
“Given the challenges faced by regional Australia, including as a result of the impacts of the recent drought, bushfires and now Coronavirus, the Government will not be acting on the Productivity Commission's recommendations.
“The most important thing we can do at this time is continue to provide certainty and confidence to those living in regional areas that the Government remains fully committed to supporting the growth of our regions and their continued success into the future.”