Norfolk not yet ready for Aust tax system

24 May 2012, 7:09 pm   -   Source: AAP

The commonwealth is continuing to work with Norfolk Island to help make the cash-strapped community more viable.

Norfolk Island won't be included in the commonwealth tax system in the near future because it's not yet ready for the change, a parliamentary committee has heard.

An economic downturn on the picturesque island, off the east coast of Australia, has led the commonwealth to provide millions of dollars in assistance so basic services can be maintained.

The 2012/13 federal budget allocated $2.9 million toward improving its hospital, waste management facilities, biosecurity and tourist attractions.

Currently, the island's 1800 residents pay no income tax but do pay a 12 per cent GST.

Senator Gary Humphries asked if there was any possibility of Norfolk Island being included in Australia's GST system from July 1.

Regional Australia department assistant secretary Adam Stankevicius said it wasn't possible.

"It's quite a complex exercise to extend the Australian tax system to the island ... it's not a system you can cut and paste," he said.

He said the Norfolk Island community also needed time to assess how a change would affect them.

"Some people see it as impinging on the sovereignty of the island," he said.

Regional Australia, Local Government, Arts and Sport department deputy secretary Dan O'Brien said the commonwealth was working with Norfolk Island officials, to help the island become self-sufficient.

This week a commonwealth financial officer had arrived on the island for the first time.

"So for the first time there will be someone who is experienced in the way in which the commonwealth budget is managed and run," Mr O'Brien told a Senate estimates committee hearing in Canberra on Thursday.

The officer had been posted to the island for 18 months.

The federal parliament passed the Norfolk Island Act, establishing the island's self-governing regime, in 1979.

In late 2010, Norfolk chief minister David Buffett told the island territory's assembly he would agree to new commonwealth laws to make the island more accountable, in exchange for federal cash and access to welfare and services.

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