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STATE TAXATION LEGISLATION AMENDMENT BILL 2014
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6 February 2014
Statement of Compatibility
O'BRIEN
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STATE TAXATION LEGISLATION AMENDMENT BILL 2014
Statement of compatibility
Mr O'BRIEN (Treasurer) tabled following statement in accordance with Charter of
Human Rights and Responsibilities Act 2006:
In accordance with section 28 of the Charter of Human Rights and
Responsibilities Act 2006 (charter act), I make this statement of
compatibility with respect to the State Taxation Legislation Amendment Bill
2014.
In my opinion, the State Taxation Legislation Amendment Bill 2014, as
introduced to the Legislative Assembly, is compatible with the human rights
protected by the charter act.
I base my opinion on the reasons outlined in this statement.
Overview of bill
The purpose of this bill is to amend the:
Congestion Levy Act 2005 to expand the congestion levy boundary at a
concessional rate from 1 January 2015;
Gambling Regulation Act 2003 to increase the two top tax brackets for hotel
and club venue operators by 4.2 percentage points and reduce the minimum
return-to-player ratio from 87 per cent to 85 per cent from 1 April 2014;
Fire Services Property Levy Act 2012 (FSPL act) to reallocate, from the
2014-15 financial year, the land use classification assigned to residential
investment flats, short-term holiday accommodation, water catchments, dams
and reservoirs, industrial and commercial zoned land with derelict buildings
and land that is used for outdoor sport; and
the FSPL act and Valuation of Land Act 1960 to make minor technical
amendments, including aligning the eligibility requirements for the FSPL
concession with the concession available for council rates.
Human rights issues
1. Human rights protected by the charter that are relevant to the bill
This bill engages the following human rights protected under the charter act:
Recognition and equality before the law
Section 8(3) of the charter act provides that every person is equal before the
law and is entitled to equal protection of the law without discrimination
within the meaning of the Equal Opportunity Act 2010 on the basis of an
attribute set out in section 6 of that act.
Clause 20 amends section 29 of the FSPL act to extend the availability of the
fire services property levy concession to a person who holds a residence right
in a retirement village. To hold a residence right in a retirement village a
person must have attained the age of 55 or retired from full-time employment
or be the spouse of such a person.
Accordingly clause 20 may impact on the right to equality and discrimination
under the charter to the extent that it provides a fire services property levy
concession based on age, which is a protected attribute under the Equal
Opportunity Act 2010.
Section 8(4) of the charter act provides that measures taken for the purpose
of assisting or advancing persons disadvantaged because of discrimination do
not constitute discrimination. This amendment is specifically targeted at
assisting senior Victorians, with fixed or low incomes, to meet cost of living
expenses.
Therefore, it is considered that this amendment falls within the exception in
section 8(4) and does not limit the right to equality and discrimination under
the charter.
Conclusion
I consider that the bill is compatible with the charter act.
Hon. Michael O'Brien, MP
Treasurer
STATE TAXATION LEGISLATION AMENDMENT BILL 2014
Second reading
Mr O'BRIEN (Treasurer) -- I move:
That this bill be now read a second time.
Speech as follows incorporated into Hansard in accordance with resolution of
house:
The State Taxation Legislation Amendment Bill 2014 makes amendments to the
Congestion Levy Act 2005, Gambling Regulation Act 2003, Fire Services Property
Levy Act 2012 (FSPL act), and Valuation of Land Act 1960 (VL act).
The Victorian coalition government is continuing to take the responsible steps
needed to manage Victoria's finances and deliver record investment in
infrastructure and services for Victorians.
The 2013-14 budget update continued this government's record of strong
financial management.
This bill implements key measures announced in the 2013-14 budget update to
redraw inner Melbourne's congestion levy boundary and adjust electronic gaming
machine taxes to ensure the appropriate return to the community from gaming
activity. These measures are critical to maintaining the state's strong
economic position, and set Victoria up for continued investment in schools,
hospitals, public transport and roads to benefit all Victorians.
The current congestion levy boundary will be expanded to include areas
contiguous to the existing inner Melbourne boundary. The new areas will be
levied at a new concessional rate of $950 per car space from 1 January 2015,
which is the equivalent of less than $2.70 per car space per day.
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The levy will continue to be applied only to owners of non-residential,
off-street car parking spaces. All existing exemptions will apply in the
expansion area so that the levy will not be payable on visitor parking,
disabled parking, hospital visitor parking, loading bays and residential
parking. New exemptions will also be introduced for parking at the Melbourne
Zoo and for temporary public parking at Yarra Park and Melbourne and Olympic
parks in the heart of Melbourne's sports precinct.
Expanding the boundary recognises the impact of congestion in the areas
surrounding the inner Melbourne area, and addresses the unfair commercial
advantage gained by operators located close to, but just outside, the current
boundary.
In line with the government's commitment to responsible economic management
and building infrastructure to meet the needs of Victoria's growing
population, revenue from the levy will be used to support public transport and
road infrastructure initiatives which are vital to our state.
In the 2013-14 budget update, the government also announced changes to gaming
machine tax rates. This announcement is consistent with the arrangements
outlined in the lead-up to the sale of gaming machine entitlements concerning
the intended share of revenue from gaming between venues and the state.
In the material provided to the industry ahead of the auction of entitlements,
the then government advised that the new tax structure was designed to collect
a share of gaming machine revenue broadly similar to that raised under the
previous gaming operator licences.
The historical average government share was between 36 and 38 per cent.
The industry was also advised that tax rates would be regularly reviewed to
ensure the government received a broadly similar share of gaming machine
revenue to the historical average.
Since the new entitlements and tax rates commenced in August 2012, it has
become clear that the tax rates legislated by the former Labor government have
failed to recover a broadly similar share of revenue as under the previous
arrangements.
The tax rates set by the former government were too low to recover the share
of gaming revenue that had been intended for the state.
As a consequence, the government's share of gaming machine revenue fell to 34
per cent in 2012-13 and was not expected to exceed 35 per cent in the
foreseeable future; considerably less than the intended 36 to 38 per cent
range.
To address this failure, the government is undertaking corrective action to
restore its share of gaming machine revenue by adjusting the top two tax
rates. The bottom tax rate will remain unchanged and the top two hotel and
club tax rates will be increased by 4.2 percentage points as follows:
for hotel venue operators, the rates increase from 50.83 per cent and 58.33
per cent to 55.03 per cent and 62.53 per cent respectively; and
for club venue operators, the rates increase from 42.5 per cent and 50 per
cent to 46.7 per cent and 54.2 per cent respectively.
As there is no change to the lowest tax rate for club and hotel venue
operators, this means that club venue operators with machines returning a
monthly average per-EGM revenue of $2666 or less will continue to pay no
gaming taxes on their earnings, while hotel venue operators in that position
will pay a concessional rate of just 8.33 per cent.
In addition, the government is adjusting the legislated minimum
return-to-player ratio that applies to hotels and clubs from 87 per cent to 85
per cent. This will bring the return-to-player ratio in Victoria in line with
New South Wales and Queensland. It is noted that many venues have chosen to
operate a return to player that is considerably in excess of the legislated
minimum and it is open to venue operators to continue to do so.
It is also noted that these tax changes do not recoup any of the more than $3
billion the Auditor-General found the former government had failed to realise
on the sale of lucrative 10-year gaming licences valued at over $4 billion for
which the former government received less than $1 billion.
The gaming machine tax changes and adjustment to the minimum return-to-player
ratio are being legislated to commence from 1 April 2014. They are essential
to ensuring that gaming venues contribute the share of tax that was intended
at the time of the industry restructure and that Victoria's schools, hospitals
and essential infrastructure continue to be securely funded.
The strong economic management of this government has enabled the most
significant state tax reform in decades with the introduction of the fire
services property levy.
As a result Victoria now has a fairer fire services funding system which
ensures all property owners contribute to the fire services, not just those
who adequately insure their properties and contents. The government has also
invested $21 million in concessions, which means that for the first time over
400 000 eligible pensioners and veterans receive a $50 discount on the levy
for their principal place of residence.
This reform is also a direct recommendation of the Victorian bushfires royal
commission.
Crucially, these reforms have assisted to put Victoria's fire services on a
more secure financial footing. This is reflected in the significant increases
to the operational budgets of the Country Fire Authority and the Metropolitan
Fire Brigade under the coalition government.
This bill makes amendments to the FSPL act and VL act, to further promote the
key objectives of the fire services property levy and streamline the
administration of the levy for local councils.
As the use of fire services can differ across properties, differential fire
services property levy rates apply to different property types. This bill will
improve the practical application of the levy for Victorians by reallocating
certain properties to different land use classifications.
Most notably this bill will reallocate residential investment flats from the
commercial to the residential land use classification. While it is appropriate
commercial rates apply to
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properties that generate an income, or are an investment, this amendment will
mean that, from the 2014-15 levy year, these residential investment properties
are treated in the same way as other residential properties which currently fall
into the residential land classification -- whether owner occupied or rented.
This bill will also reallocate dams, reservoirs, water catchments, and outdoor
sporting grounds to the public benefit classification, and commercial and
industrial land with buildings that add no value to the vacant land
classification. These classifications will better reflect the practical
application of this land.
These amendments demonstrate that the government is delivering on its
commitment to the fair and equitable operation of the fire services property
levy.
The coalition government acknowledges the important role that local government
has played in implementing and administering the fire services property levy.
This bill will also make a number of minor technical amendments to the FSPL
act and VL act, which will further streamline the administration of the levy
and ensure the FSPL is supported by a dynamic and responsive valuation system.
A number of the amendments are intended to make it easier for local councils
to administer the levy by ensuring that the administrative framework for rates
and the fire services property levy are aligned. This includes amendments to
allow the apportionment of the fire services property levy in the same
circumstances that rates can be apportioned, and technically aligning the
eligibility requirements for the fire services property levy and municipal
rates concessions.
This bill will also make it easier for councils to apply the fire services
property levy by allowing the councils to apply the lower Metropolitan Fire
Brigade (MFB) rate where a parcel of land extends across the MFB and Country
Fire Authority border.
This bill will also amend the VL act so that Victoria's valuation system can
better support the administration of the fire services property levy. This
includes amendments which provide the valuer-general Victoria with authority
to amend the Victorian best practice specifications guidelines during the
biennial valuation period. These guidelines are prepared by the valuer-general
to assist councils to prepare valuations. This amendment will allow the
valuer-general to review the guidelines more regularly so that areas of
uncertainty can be addressed during the valuation cycle, helping to maintain
the quality of valuations and property databases, which are used to assess the
fire services property levy.
This bill will also make amendments to ensure that supplementary valuations
and adjustments can be made where a change of occupancy affects the use of the
land, or the initial valuation incorrectly identified the use of the land.
These amendments will ensure that the amount of fire services property levy
collected is based on the current use of the land, and the integrity of
valuations and property databases can be maintained.
Other amendments to the FSPL act and VL act made by this bill include minor
technical improvements which were identified during implementation of the
levy. These amendments will improve the quality of the legislation and provide
greater clarity and certainty for local councils in administering the fire
services property levy.
I commend the bill to the house.
Debate adjourned on motion of Ms GREEN (Yan Yean).
Debate adjourned until Thursday, 20 February.