POPULAR WORDS

Victorian Premier Steve Bracks has rejected a recommendation to adopt a flat land tax rate following strong criticism of the proposal by small business and self-funded retirees. His comments mark a significant development in the state's tax review. Until now, Bracks has refused to rule in or out most of the recommendations of the recent review of state taxes headed by accountant John Harvey, saying only small businesses and self-funded retirees will be better off under the package of business tax reforms being developed by the government. But yesterday he changed tact, conceding there are a "lot of concerned land taxpayers or those who believe that they could pay land tax". Bracks agrees the recommendation to replace the current progressive rate with a flat rate of 2.89% and to drop the threshold of $85,000 is "too broad in its composition". In particular, the proposal would have hit hard a significant number of small and medium-sized businesses. One business, Kevron Plastics, estimates the proposal would see its land tax bill jump from $234 in 1999/2000 to $7,080 a year – an increase that would be partly offset by a $2,500 saving from the proposed abolishment of other state taxes, especially stamp duty on general insurance premiums. "I don't think it's acceptable to have such a broad-brush approach for all land taxpayers in Victoria," Bracks says. In response, Harvey says scrapping the flat-rate land-tax proposal will need to be offset by the government making "serious inroads into business stamp duty cuts".