GST revenue provision
The A New Tax System (Commonwealth-State Financial Arrangements) Act 1999 (the Act) provides that the States receive all GST revenue. The GST revenue pool is distributed to the States on the basis of recommendations of the Commonwealth Grants Commission, which applies the principles of Horizontal Fiscal Equalisation to help determine State revenue shares. Budget Paper No. 3, Federal Financial Relations 2006‑07, provides more detail on Horizontal Fiscal Equalisation.
Under the Act, the Commissioner of Taxation (the Commissioner) is required to make a determination by 20 June each year of the estimated GST revenue collections for the year. In accordance with the Commissioner’s determination of GST revenue on 20 June 2006, a total of $37,181.6 million was provided to the States in 2005-06. This reflects a GST revenue estimate for 2005-06 of $37,470 million less a $288.4 million adjustment for the difference between the Commissioner’s determination of 2004-05 GST collections and the 2004-05 GST outcome. The Commissioner’s estimate of GST for 2005-06 was broadly consistent with the final GST revenue outcome as reported in Appendix A and in Note 18 in Part 3.
The final provision of GST revenue to the States in 2005-06 is illustrated in Chart 1.
Chart 1: GST revenue provision to the States and Territories — 2005-06
The calculation of the distribution of GST revenue to the States is shown in Table 31. The distribution differs marginally from estimates shown in Budget Paper No. 3, Federal Financial Relations 2006-07, reflecting final determinations made under the Act.
The 2005-06 GST revenue was distributed, in accordance with the Act, using GST relativities recommended by the Commonwealth Grants Commission.
Table 31 shows the per capita relativities applied to the States’ populations (as at 31 December 2005) in order to arrive at a weighted population share for each State. A State’s share of GST revenue is equal to its weighted population share of the combined GST revenue and unquarantined Health Care Grants, less the unquarantined Health Care Grants it receives.
Table 31: GST revenue provision to the States and Territories(a)
- Consistent with the Act, $219.4 million in compensation paid to the States in 2004-05 as an advance from their 2005-06 GST entitlement was deducted from GST payments to the States in 2005-06. This amount was repaid to the States in 2005-06 in addition to the $127 million it is estimated the States required to compensate for lower GST revenue in 2005‑06 as a result of allowing certain taxpayers to pay GST annually.