NO.106

STATES BETTER OFF UNDER GST

GST revenue to the States and Territories for 2003-04 is estimated to be $32.457

billion dollars.

After just three years of The New Tax System, six States and Territories

are expected to receive more revenue in 2003-04 than the Guaranteed Amount they

would have received under the old tax system. Compared to Budget, the MYEFO

estimates show that South Australia no longer requires Budget Balancing Assistance

in 2003-04. When added to the five other States and Territories estimated at

Budget to be better off in 2003-04 – Queensland, Western Australia, Tasmania,

the Australian Capital Territory and the Northern Territory – these six States

or Territories are estimated to be better off by some $575 million in 2003-04.

See the attached table for further information.

CANBERRA

8 December 2003

Contact: David Alexander

02 6277 7340

Forward estimates of Budget Balancing Assistance and States’ gains

from tax reform(a)

(a) Projections from 2004-05 will be affected by variations in Guaranteed Minimum

Amount components, GST revenue growth and recommendations by the Commonwealth

Grants Commission on the distribution of GST to each of the States and Territories

in future years. See Budget Paper No 3 Federal Financial Relations 2003-04

for details of the Guaranteed Minimum Amount and the distribution of GST revenue

among the States and Territories.

(b) In accordance with the Intergovernmental Agreement on the Reform of

Commonwealth-State Financial Relations, Bank Account Debits tax is scheduled

to be abolished by 1 July 2005. The revenue forgone by the States

and Territories is included in each State’s and Territory’s Guaranteed Minimum

Amount from 2005-06 to ensure the States are no worse off. Accordingly, the

amount by which GST exceeds the Guaranteed Minimum Amount decreases in 2005-06

compared to 2004-05.