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Impact of the Governments Plan for a New Tax System on Rural and Remote Indigenous Communities Report Prepared by ATSIC January 1999 The Allen Consulting Group



Impact of the Governments Plan for a New Tax System on Rural and Remote Indigenous Communities Report Prepared by ATSIC January 1999 The Allen Consulting Group

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Tabled paper 965


Tabled Papers for 8th Assembly 1997 - 2001; Tabled Papers; ParliamentNT




Tabled by Sydney Stirling


Made available by the Legislative Assembly of the Northern Territory under Standing Order 240. Where copyright subsists with a third party it remains with the original owner and permission may be required to reuse the material.




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I m p a c t o f a N e w T a x S y s t e m o n R u r a l a n d R e m o t e I n d i g e n o u s C o m m u n i t i e s Taking the estimate of the share of the communities expenditure on clothing and footwear in household budgets, together with the estimate of the effect o f the GST in increasing consumer prices for clothing and footwear, we estimate that the tax package effect on prices of textiles, clothing and footwear will add 0.35 per cent to the communities CPI. 4.2.4 Housing Housing is usually provided in rural and remote Indigenous communities by a community housing organisation that is funded by the Government. Rents are paid to the housing organisation, which have regard to the income o f households and to the depreciation and maintenance costs of the housing provided. Typically the rents do not fully cover the costs of housing. Payment of rent is a significant item in the household budgets of rural and remote Indigenous communities and the survey finds that they spend about 9 per cent of their income on rents. The GST will add to the costs of community housing organisations, both through the additional costs of building materials for maintenance of existing houses and building new houses and maintenance costs in general. Over time it can be expected, other things being equal, that the community housing organisations will be under pressure to increase rents as a result of the tax package. If, as is likely, community organisations are unable to charge higher rents due to an incapacity to pay by many households, the likely outcome will be a reduction of services such as fewer houses and less frequent repairs and maintenance thereby exacerbating overcrowding and sub-standard housing conditions. For the purposes of this study we have used the Governments tax study estimate that the GST will increase the cost of ownership of dwellings by 2.3 per cent. As indicated in the Governments tax report, the impact of the GST on residential housing will be reduced by a new First Home Owners Scheme. Given that rural and remote Indigenous communities can be expected to get little or no benefit from this scheme, it may be that the 2.3 per cent figure represents an underestimate of the true impact of the tax package in increasing the cost of housing in the communities. Taking the share of communities household budgets spent on housing together with the Governments tax study estimate of the effect of the GST in increasing housing costs, results in the communities cost of living increasing by 0.21 per cent. 4.2.5 Transport The survey shows that rural and remote Indigenous communities are spending about 6 per cent of their household budgets on transport. This presumably relates primarily to expenditures on motor vehicles and taxi fares. T in ' A l len C o n su l t in .n ( in n ip 13