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2011-01-15

In defence of states' rights in federation

Comments on Peter van Onselen “States' rights back on table”, 15/01/2011, http://www.theaustralian.com.au/news/opinion/states-rights-back-on-table/story-e6frg6zo-1225988004962

An interesting article on the state of federation politics.

There should be some remake or amendments of the constitution to safeguard the most proper federation structure and the rights of each levels of government.

The mining tax is dressed up by centralists or the federal Labor government as: 1. a more efficient tax on use of natural resources, 2. a policy response to the two speed economy.

But it disguises the real invasion of or grab by Canberra into states taxing power on natural resources.

If the core purpose of the new mining tax is for an efficient minerals tax, then the revenue should belong to the states where the minerals are. That will certainly avoid the dilemma that states may want to increase their royalties and shift the burden to the Commonwealth that has been a controversy for sometime with the MRRT.

The Labor government's messing up in the SRPT and MRRT will make tax reforms even harder, given the tax grab tendency by Canberra and the states will be very wary about reforms that erode their tax powers in the guise of more efficient taxes.

Canberra should give up its tax grab tendency and stay true with improving national efficiency. That will be assist in getting the states on board of economic and national taxation reforms.

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