Today’s South Australian State Budget, released by Treasurer Tom Koutsantonis, focuses on tax reform and stimulating growth while returning the budget to surplus.
By Bryce Prosser
The cornerstone of South Australia’s 2015-16 Budget is the announcement of a $945 million stimulus package including major tax reforms and an investment of $315 million to fund growth industries, attract investment and create jobs.
The major tax reform package is the Government’s response to the State Tax Review [PDF] that CPA Australia was closely involved with. Today’s reforms include almost $670 million in tax reductions over the next four years including ongoing reductions of more than $268 million per year from 2018-19.
In terms of the State’s finances, South Australia is expected to strengthen its financial position over the next four years with a projected budget surplus of $43 million in 2015-16 rising to $961 million by 2018-19.
Despite serious challenges for the economy, including the closure of the Holden manufacturing plant, over the next four years the South Australian economy is expected to grow by around 2.0 per cent in 2015-16 rising to 2.25 per cent in 2018-19, supported by the announced tax reform measures and investments.
Employment growth is expected to remain modest over the next four years at around 1.0 per cent per year.
Major tax reforms announced
Today’s Budget includes the most comprehensive package of tax reforms in South Australia’s history, valued at around $670 million over the next four years.
Each of these reforms have been made to reduce the cost of doing business in South Australia and help businesses create jobs.
Taxes to be abolished include:
- Share duty
- Stamp duties on:
- Non-real property transfers
- Non-residential real property transfers (complete abolition by 1 July 2018)
- Genuine corporate reconstructions
- Save the River Murray Levy
- Conveyance duty and land tax on principal place of residence properties transferred into special disability trusts
- Hindmarsh Island Bridge Levy
Tax relief measures include:
- An extension of the small business payroll tax rebate to 2015-16
- A reduction in stamp duty on mining tenements, with this stamp duty set to be abolished in 2018
- An increase in the land tax index threshold to $323,000.
Tax simplification through replacing existing ex-gratia relief with legislative exemptions for:
- Farm transfers between family members
- Property donations to charaties
- Motor vehicle taxes for disability service providers and incapacitated person
The government stated, however, that it is only possible to reform payroll taxes and online gambling taxes as part of the national tax reform process.
Stimulus package designed to boost the South Australian economy
Major announcements have been made in this year’s budget to stimulate specific sectors of the South Australian economy, including:
- $35 million over two years to promote South Australia domestically and internationally and secure new major events and conferences
- $15 million over two years to fund a dedicated investment attraction agency
- $5.7 million for a new "Destination Adelaide" campaign
- $25 million over three years for school improvements including information technology infrastructure
- $25 million over three years to establish five new children’s centres and general improvements to existing facilities
- $20 million in additional funding for public housing
- $70 million over four years to improve roads
- $55 million over four years for a new 2.8km road in Gawler East.
As part of the Budget announcements the Treasurer also made a guarantee that the State Government will spend "at least $1.3 billion per year on infrastructure in the general government sector to provide world-class services the public expect and deserve while also supporting jobs into the future."