A PRODUCTIVITY Commission report has raised red flags about sector-specific levies, including the Federal Government’s new biosecurity levy.
The report, Towards Levyathan? Industry Levies in Australia, said the number of these levies had grown from 26 to 248 since 1980, becoming the “long tail” of Australia’s tax system.
Productivity Commission deputy chair Alex Dobson said industry levies, originally introduced in the agriculture sector to raise funds for activities to benefit producers, were now being imposed by policymakers on a wide range of industries, and in some cases as a way of simply raising general tax revenue.
“Taxes work best when they are simple and efficient – but many industry levies are relatively expensive to collect, unnecessarily distort business activity, and waste time and resources of business and government,” Dr Robson said.
“If governments can’t restore policy discipline to the design and implementation of these levies, our chance of a more efficient tax system that fosters productivity growth risks death by a thousand micro-taxes.”
The report did not formally review the biosecurity levy on primary producers but included it as a case study.
The levy, which takes effect on July 1, failed on four of 11 questions asked by a levy-design framework, and on four other questions it was “unclear” about meeting or “unlikely” to meet the framework’s guidelines.
Member for Mallee Anne Webster, a Nationals MP, said the levy was “an insult to our producers”.
“To make them pay for biosecurity risks posed by their competitors in other countries who import into Australian markets – it is complete nonsense,” she said.
“Mallee producers already pay sector-specific levies on citrus, avocados, wine grapes, table grapes, grains and dozens more.
“Those voluntary levies support productivity improvements and the mandatory biosecurity levy might see farmers pull back their voluntary levy contributions, and thereby reduce research and development and productivity.”
With the levy in place, total spending on biosecurity of $804.6 million next financial year was forecast to be funded 44 per cent by general tax revenue, 48 per cent by importers, 6 per cent by domestic primary producers and 2 per cent by Australia Post.
According to the Department of Agriculture, the levy was designed to be a “mechanism for producers, as major beneficiaries of biosecurity controls, to contribute to the long-term commitment” of keeping Australia’s biosecurity safe.
Agriculture Minister Murray Watt has said the levy was “very modest” and would help “meet the costs of sustainably funding our biosecurity system”.
National Farmers Federation president David Jochinke said the Productivity Commission report backed the NFF’s view that the biosecurity levy was a “deeply flawed” policy.
“The report highlights significant issues with the design, including equitability, accountability, efficiency and a lack of clear links to outcomes valued by industry,” Mr Jochinke said.
“Importantly, the report shows that concerns raised by the NFF and much of the industry were not simply playing politics or looking to avoid contributing more to the biosecurity system.
“The NFF has been very consistent in its approach to this issue – this is about the policy construct, not us wanting to avoid paying more.”
