INTHEBLACK August 2024 - Flipbook - Page 44
F E AT U R E
“Taxes work best when they are
simple and efficient – but many
industry levies are relatively
expensive to collect, unnecessarily
distort business activity and waste
the time and resources of business
and government.”
DR ALEX ROBSON, PRODUCTIVITY COMMISSION
These industry levies are
collected and administered
by about 70 different
state, territory and
Commonwealth
departments including
government-controlled
levy recipient bodies.
A GROWING BODY
OF INEFFICIENT TAXES
A detailed research
paper, Towards Levyathan?
Industry levies in Australia,
was published by the
Productivity Commission in
December 2023. The paper notes
the absence of guidelines for assessing
the policy value of individual industry
levy proposals, and that little is still known
about the collective impact of levies on
productivity growth, industry behaviour and
the Australian economy. In addition, it found
that industry levies represent a growing form
of micro-taxation in Australia.
Industry levies are effectively the “long
tail” of Australia’s tax system, where 10 taxes
collect more than 90 per cent of overall tax
revenue, and industry levies raise less than
2 per cent, the paper says.
For example, the 2022–23 Final Budget
Outcome shows that A$666 million was
raised from about 70 different agricultural
levies. A further A$1.52 billion was raised
from the Major Bank Levy, which has been
imposed on Australia’s five largest banks
since 2017, out of total taxation receipts
of A$601.3 billion.
Deputy chair of the Productivity
Commission, Dr Alex Robson, says that
industry levies are being charged by more
jurisdictions to fund a growing number
of policy goals, and some have been imposed
simply to raise general tax revenue.
44 INTHEBLACK August 2024
“The question really is, are industry levies
being designed with any efficient or equitable
principles that we usually think about when
we think about designing taxes?” Robson says.
“The answer is, basically, we don’t really know,
because they don’t tend to be assessed as far as
we can see on that basis, and then nobody really
goes back and re-evaluates them to see whether
they are meeting these principles.
“While many levies are nominally collected
to cover the cost of government regulation
or mitigate environmental costs, these goals
could often be pursued more effectively and
efficiently through the broader tax system.
“Taxes work best when they are simple
and efficient – but many industry levies are
relatively expensive to collect, unnecessarily
distort business activity and waste the time
and resources of business and government.”
The Productivity Commission paper
also found that the cost of collection for
some levies has been generally higher
than the Australian Taxation Office (ATO)
cost of 57 cents per A$100 collected.
It has therefore recommended that
Australian state and territory governments
should weigh the merits of using either
the ATO or state revenue offices to collect
all industry levies.
COST RECOVERY
The Australian Government charges
non-government entities various levies
to recover the costs of providing its range
of services.
For example, the Australian Securities and
Investments Commission’s (ASIC) industry
funding model (IFM) is the means through
which regulated entities are charged levies by
the regulator to cover its service costs from
the previous financial year.
Cost recovery levies are charges imposed
when a good, service or regulation is provided
to a group of individuals or organisations.
