In September the Productivity Commission handed down its draft report on Remote Area Tax Concessions and Payments which found remote area tax concessions and payments were "outdated, inequitable and poorly designed" and should be reconfigured "to reflect contemporary Australia".
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The report said many areas once considered isolated are no longer remote, and improvements in technology have reduced hardships in remote Australia.
The zone tax offset (ZTO), the remote area allowance (RAA), and fringe benefits tax (FBT) remote area concessions are broadly designed to mitigate some of the inherent challenges, and facilitate development in regional and remote Australia.
The PC called the ZTO "ineffective and blunt" and said there was no evidence it affected where people choose to live or work. It wants to abolish the ZTO as "there was no general role for government to compensate taxpayers for the disadvantages of life in particular areas" and remote living was "largely a matter of choice".
The RAA is a supplementary payment directed to people on income support in remote areas to partially compensate for higher living costs in areas with socio-economic disadvantage and mobility issues.
While the PC said the RAA has a legitimate role, its boundaries should updated to contemporary measures of remoteness and its payment rates reviewed.
FBT concessions for remote areas provide equitable tax treatment where employers have operational reasons to provide goods and services to employees.
The PC said concessions were "poorly targeted...overly generous and complex" and create other inequities.
It said FBT remote area concessions should be redesigned to be consistent with the principle of equitable tax treatment while reducing the cost burden on taxpayers and it wants to slash concessions on employer-provided housing .
These recommendations are a slap in the face to areas like Carpentaria and Burke Shire where basic cost of living is high due to freight charges. They say these payments should be increased not removed.
This is a test of economic rationalism versus the reality of living remote. Let's hope the government listens to the latter argument.
Derek Barry
Editor of the North West Star Mount Isa since January 2016. Prior to that, an editor at several regional southern Queensland newspapers. Passionate about telling local stories. Comes with a strange accent to due an Irish accident of birth.
Editor of the North West Star Mount Isa since January 2016. Prior to that, an editor at several regional southern Queensland newspapers. Passionate about telling local stories. Comes with a strange accent to due an Irish accident of birth.
