hey blade all tip, no iceberg eh?
Let me help you out there.
"When Peter Costello carries on about how NSW taxpayers are being ripped off on state taxes, he's dead right. But it's him that's doing the ripping, not the State Government.
It's true that NSW is the highest taxing state government, but that situation is forced on us by the antiquated and unreasonable way the GST revenue is divided between the states. And it can never change until Mr Costello agrees to reform the system.
The way he tells it, the states have been really raking in revenue from the goods and services tax, raising far more than they ever expected, so it's only fair that they honour their undertaking to abolish various inefficient stamp duties from July next year.
Only NSW and Western Australia have refused go along with this, so Mr Costello is grandstanding about how their citizens are paying "double taxation" - the GST and various stamp duties - and how he'll be morally obliged to step in and rescue us by forcing tax cuts on the grasping Carr Government.
But there are any number of misrepresentations in Saint Peter's version of events. The first and most important point is that, while it's true of the states in general that they've had big windfall gains from the GST, it's not true of NSW in particular.
The original inter-governmental agreement reached between the feds and the premiers in 1999 promised that if the states' revenue from the GST fell below what they would have received under the old revenue-sharing formula, they'd be topped up to this "guaranteed minimum amount".
By the third year, 2002-03, Queensland was getting more than the minimum and by the following year all states and territories were above the minimum - bar NSW. In that year the others shared a windfall of $1 billion above the minimum, with Queensland bagging half of it.
Last financial year we finally got ahead of the game, gaining a princely $177 million windfall, while the others shared an extra $1.7 billion between them (with the Queenslanders bagging $737 million). In the present financial year, however, our ill-gotten gain is budgeted to fall to a mere $43 million, while the others share $1.5 billion.
So Mr Costello's line that we've been raking it in and can easily afford to abolish state taxes is quite untrue. It's true for the others, but not for us - as Mr Costello undoubtedly knows.
His next misrepresentation (to put it mildly) is his line that we, along with the other states, promised to abolish certain stamp duties after 2005. It's not true. Our only commitment was to "review" those taxes. To review doesn't mean to abolish - as the lawyerly Mr Costello would know full well.
On a lower level of dishonesty, Mr Costello has sought to give people the impression they have a lot to gain from the removal of the various taxes. He's done so by hoping people will confuse the stamp duty on "mortgages" with the stamp duty on property conveyances.
The two are quite separate, with the stamp duty on the mortgage document being minor compared with the huge duty on the conveyance.
In truth, most of the direct benefit from removing the taxes would go to businesses. The stamp duties are on non-quotable marketable securities, lease agreements, mortgage documents and other loan securities, instalment purchase arrangements and rental agreements, cheques (abolished long ago in most states) and business conveyances other than real property.
Some states abolished their bank accounts debit (BAD) tax only this month, but we got rid of ours several years ago - another small fact Mr Costello never acknowledges.
You see from all this how seriously Mr Costello misrepresents the true position. But why has NSW - by far the largest state - gained so little from the GST while the others have gained far more than originally expected?
Because of the way NSW is penalised in the carve-up of the GST revenue between the states and territories. The division is proposed by the Commonwealth Grants Commission - after the most arcane and hair-splitting calculations - and approved without question by Mr Costello.
But isn't this an age-old story? Hasn't the pot been split up this way for decades? What's changed?
It's true NSW and Victoria have been required to subsidise the smaller states for donkeys' years. But there've been two significant changes in recent times.
The first is that, until lately, it was only ever the feds' general financial assistance grants that were subject to the grants commission's carve-up.
But the GST has replaced not only the financial assistance grants but a range of state taxes: those abolished as part of the package (stamp duty on shares, the financial institutions duty - FID - the bed tax and now BAD) and the franchise taxes on tobacco, liquor and petrol, which were struck down by the High Court.
Naturally, when the NSW Government imposed state taxes on its own residents, it kept the whole of the proceeds. But now those taxes have effectively been rolled in with the financial assistance grants and the whole thing - the GST - put through the grants commission's sausage machine.
As a result, a much higher proportion of this state's total revenue is now diverted to the smaller states. They now get a share of what used to be our own state taxes.
The second significant change is that, just last year, the grants commission re-jigged its formula and cut our share of the (much bigger) pie even further.
The upshot is that, though the citizens of NSW pay about $13 billion a year in GST, our Government gets only about $10 billion back. The missing $3 billion is the annual subsidy Mr Costello requires us to give the other states and territories - particularly the backward and struggling states of Queensland and WA.
Why are NSW and Victoria singled out for the honour of propping up the other states? Because we have the highest capacity to extract tax revenue from our citizens.
Now do you get it? NSW is forced to be the highest taxing state because we're forced to make the biggest donation to the states with less "taxable capacity". (Never mind that, thanks to our generosity, Queensland can afford not to have several of the taxes we have.)
Even though the system has shifted so much further against us in recent years, Mr Costello has steadfastly refused to tell the grants commission to come up with a more reasonable formula.
To put it crudely, he's afraid of losing seats in Queensland (as is federal Labor).
And now he's adding insult to injury by carrying on about what a robber baron Bob Carr is, and portraying himself as the white knight who'll deliver tax relief to the citizens of NSW by forcing the miserly State Government to abolish more stamp duties.
Only a politician could be so duplicitous."
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