Regional Queenslanders should be taxed more: report says

THOUSANDS of regional Queenslanders would be slugged $320 more in tax on average each year under a plan to scrap a special concession.

Townsville, Mackay and Cairns residents would all lose out under a Productivity Commission draft report released today which calls for zonal tax offset for regional Australia to be scrapped, slamming it as outdated and flawed.

It says scrapping the offset enjoyed by hundreds of thousands of regional Australians would save the budget $150 million a year.

But some more remote towns could benefit, as it recommends a separate remote area allowance should be reviewed and boosted.

 

Townsville residents would pay $133 more tax each year under a proposal to scrap the Zonal Tax Offset for regional Australia. Picture: Megan MacKinnon
Townsville residents would pay $133 more tax each year under a proposal to scrap the Zonal Tax Offset for regional Australia. Picture: Megan MacKinnon

The offset, which dates back to World War II, was meant to attract people the remote areas and compensate them for higher a cost of living.

But the review states places like Townsville, Mackay and Cairns now have airports, retail markets and key services, while technology improvements mean remote areas are not longer quite so isolated.

The average offset claim is $319 a year, though varies from $133 to $1146 depending on what zone a person lives in.

People living in Townsville Cairns and Mackay are all entitled to claim up to $133 a year, while more remote areas will be able to claim more.

 

The offset, which dates back to World War II, was meant to attract people the remote areas and compensate them for higher a cost of living. Picture: Brendan Radke
The offset, which dates back to World War II, was meant to attract people the remote areas and compensate them for higher a cost of living. Picture: Brendan Radke

 

"The (Zonal Tax Offset) is an ineffective and blunt instrument. There is no evidence to suggest that the ZTO currently affects where people choose to live or work," the Productivity Commission report found.

It noted someone living in Mt Isa, population 22,000, Cloncurry, population 2700, and Camooweal, population 208, were all entitled to the same offset despite vast differences in the towns.

Those living in more remote areas would be protected from the scrapping of the ZTO because they are also entitled to a Remote Area Allowance.

The RAA is paid automatically each fortnight as a flat payment across all eligible remote areas and income groups.

People living in Townsville Cairns and Mackay are all entitled to claim up to $133 a year, while more remote areas will be able to claim more. Picture: Stuart Quinn
People living in Townsville Cairns and Mackay are all entitled to claim up to $133 a year, while more remote areas will be able to claim more. Picture: Stuart Quinn

It works out at $470 a year for an individual and $1190 a year for a couple with two children.

This allowance is reduce by a dollar for every dollar of the zonal tax offset the person earns, so scrapping the ZTO would not impact people on this allowance.

The draft report recommended the RAA should be reviewed and increased, as the payments have only risen twice in the past 20 years.

The Productivity Commission's final report into remote area tax concessions is not due until February 2020.