Tax cuts brought forward as MAC bolsters budget bottom line
The Weatherill Government has caved to Liberal demands to bring forward business tax cuts slated for next July, as Treasurer Tom Koutsantonis tries to stimulate jobs growth in his Mid-Year Budget Review.
The Opposition last month released a Jobs Plan, much-mocked by Labor, which repeated calls for the Government to “bring forward the abolition of stamp duty on non-residential real property”, then slated for July 1, 2016.
“By accelerating the reduction and abolition of the stamp duty, businesses will have the incentive to bring forward their investments, leading to more development earlier and more jobs for South Australians,” the Liberal document argued.
Treasurer Tom Koutsantonis on Monday did just that, with the MYBR including $24.8 million to immediately implement the first third of the reduction.
“The bringing forward of this tax cut means any business that now purchases a commercial property in SA pays the lowest stamp duty costs of any state in the country,” he said.
“A business purchasing a $10 million commercial property will, from today, save more than $181,000 in stamp duty…that can be reinvested by the business into fit-outs or incentives to attract tenants, which ultimately leads to more jobs.”
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But the second tranche of the phase-out won’t proceed until July 2017 as planned, with the stamp duty to be abolished by mid-2018.
Koutsantonis – who in September told InDaily he expected to exceed his June budget targets – announced the state surplus will significantly outstrip its June forecast of $43 million this financial year, but the rate of growth will slow over the forward estimates.
The June budget predicted a $43 million surplus in 2015-16; today’s mini-budget shows a far healthier surplus of $355 million, largely buoyed by a raid on the Motor Accident Commission’s coffers, with “strong investment conditions (providing) the capacity for the MAC to pay a further dividend of $403.5 million in 2015–16”.
However, the 2018-19 surplus is now predicted to be $978 million, only slightly better than the $961 million forecast in June.
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The MYBR papers explain that “the net operating balance has deteriorated in 2016–17 since the 2015–16 Budget, mainly due the timing of distributions from SA Water, expenditure on economic development measures and with the revised timing of the completion of the new Royal Adelaide Hospital”.
The new RAH’s opening has been delayed until six months after the promised April 2016 deadline.
The budget papers say the improvement in the 2015-16 bottom line is “primarily due to a further $403.5 million dividend from the MAC to the Highways Fund to invest in improving the safety of roads”.
The MAC will be privatised from July next year, with Koutsantonis announcing today motorists will be allocated to one of four private Compulsory Third Party providers – QBE Insurance (Australia) Limited, AAMI, SGIC and Allianz Australia Insurance Limited.
“Importantly, this model provides a seamless transition for SA motorists,” he said, insisting CTP prices will be fixed to “CPI-like” increases of about three per cent per annum for the first three years.
He said the Transport Department would continue to issue CTP renewal notices as part of the vehicle registration process.
Taxation revenues have been revised down across the forward estimates by a total of $389 million, but GST revenues will increase, “mainly reflecting revisions to SA’s expected share of the GST revenue across the forward estimates”.
Other “announceables” contained in the MYBR included:
- $10.7 million over two years to build an additional 72 beds at Mobilong Prison
- $4 million to upgrade the Port River rail bridge on the Outer Harbor line
- $12 million to encourage more companies to set up at Mitsubishi’s former Tonsley site, and
- an extra $6.4 million over two years for the Regional Development Fund
