The Townsville Chamber of Commerce has called for a revamp of current tax arrangements for North Queensland. The Chamber is concerned the existing Zone Tax Offset has been eroded in value by inflation and is being claimed by fly-in, fly-out (FIFO) workers who don’t reside in NQ. As reported in the Townsville Bulletin yesterday:
The Townsville submission includes a number of recommendations for tax reform.
It calls for tax incentives for critical infrastructure, and tax deductions for residents who invest in “community infrastructure” such as solar panels.
The submission also raises one of the long-held criticisms made by North Queensland leaders – that the north’s contribution to Australia’s revenue from tax and royalties is not reflected in what the Government spends here.
I’ve previously criticised a proposal for special tax treatment for NQ and I maintain the same position that we should improve tax and regulatory policy settings across the whole country rather than favouring one region over others:
Government right in rejecting northern economic zone
We want businesses to invest and workers to live where they are most productive, and these decisions shouldn’t be distorted by tax concessions.
The Chamber is correct that the North makes a disproportionate contribution to the economy and Government revenue – well at least North West Queensland and the Mackay region do due to mining (see my post from last year: Which Qld regions are the most productive per capita?). However, a lot of the infrastructure that has been built to develop the North has been paid for by taxpayers and shareholders across Australia, so I can’t see much logic in the case that tax revenue generated in NQ should be returned to NQ, particularly when there might be more beneficial uses of tax revenue elsewhere in Queensland or Australia.
I doubt the Chamber will be successful in securing significant tax concessions for NQ, as I expect the Treasury will fight very hard against this proposal. In my view, the Chamber should instead focus its efforts on pushing for industrial relations reform in the interests of NQ’s tourism sector (see my post Tourism sector needs IR reform).
Queensland Economy Watch 
Thank-you for the information on the Zone Tax off-set. I must say I was not aware of it. Given my son will soon be based in Milingimbi NT, I have an opinion on the matter. ( Look it up ) The Zone Tax offset is only $338 per annum for a single person, considering the lack of services in these remote areas, I think that people who work there for the benefit of others are entitled to a tax break. $338 will not cover the cost of mosquito repellant for a year, let alone go any way towards compensation taxpayers for lack of access to health, education, arts, and infrastructure services that their tax pays for. Nor does $338 seem fair compensation for travel costs to enjoy access to the tax payer funded services the rest of us enjoy .
Thanks for the comment, Katrina. I think that’s a fair point that if you’re in a really remote area an offset might be equitable because you’re missing out on a lot of Government-funded services including the arts. I’m unconvinced by the need for it in places like Cairns and Townsville, however.
The IPA have also been active here with a policy branch in support of special economic zones in the north and presume have some influence with the current government. I have always found this somewhat odd and ideologically conflicted coming from the IPA.
BTW not sure on current zones for that tax offset but can also be somewhat arbitrary and irrational.
Yes, I too found it odd the IPA supports special economic zones.