Western Australia's submission to the Henry Tax Review

The State Government today lodged its submission to Federal Treasury secretary Dr Ken Henry's review of the national tax and transfer system.

Treasurer Troy Buswell said the Henry Tax Review was a significant opportunity for reform of Commonwealth-State financial relations.

"Our submission to the Henry Review reflects our very strong view that we need increased independence from the Federal Government for the long-term security of our income stream," Mr Buswell said.

"In a few years, the current regime will see us only getting back fifty cents in every dollar of GST we pay. This was never the intention of that tax reform.

"A much better outcome would be if States were responsible for their own tax income rather than the Commonwealth - at the moment Western Australia's economic success is penalised because it is used to subsidise other underperforming Australian States."

States currently have responsibility for core community services, such as education, health and law and order, but limited means to pay for them.

States were forced to rely heavily on grants from the Commonwealth - which raised more revenue than needed - for funding their spending responsibilities.

These limitations and the way Commonwealth grants were distributed could have perverse consequences for State and national economic development.

"Tax base sharing with the Commonwealth could reduce these problems and slash taxes and the associated administrative and compliance burden," the Treasurer said.

The State submission also canvasses changes to Commonwealth tax arrangements that could better support national economic activity, including in relation to remote areas and incentives for resource exploration and investment.

A list of the submission's recommendations is attached.  A full copy of the submission is available from noon at http://www.dtf.wa.gov.au.