Should States have access to income Tax to improve the vertical fiscal imbalance

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On 19 January 1970, the Premiers of all States signed a document entitled The Financial Relationships of the Commonwealth and the States. This document envisaged a scheme whereby the States should have access to income tax. At the subsequent Premiers’ Conference in February 1970, the Prime Minister rejected this proposal, citing a number of objections. These included macro-economic policy making considerations, the ‘equitable’ treatment of all Australians brought about by uniform taxation, the budgetary problems that would be faced by the States as income tax receipts fluctuated and the problems that would arise in the process of calculating equalisation grants by the Commonwealth Grants Commission (James, 1997).




8.3 Addressing vertical fiscal imbalance.


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