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States could collect income tax under radical plan backed by Malcolm Turnbull

Michael Koziol reports in the Brisbane Times (30.3.16) on a proposal floated by Prime Minister Malcolm Turnbull that would see the states responsible for raising part of the overall income tax take. The idea comes on the eve of a COAG meeting in Canberra, with a number of Premiers already pouring cold water on the idea.

‘States and territories would collect a portion of the nation’s income tax for the first time since World War II under a radical proposal being driven by Prime Minister Malcolm Turnbull.

‘In what he labelled “the most fundamental reform to the federation in generations”, the Commonwealth would lower income tax by a given amount and allow the states to make up the difference.

‘”We, the federal government, will reduce our federal income tax by an agreed percentage and allow state governments to levy an income tax equal to that amount,” Mr Turnbull proposed.

‘The Commonwealth would then withdraw from a number of the existing grant programs by which it redistributes income taxes to the states and territories. There would be no increase in income tax from the taxpayers’ point of view, the Prime Minister said.’

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