The proposed axeing of tax offsets for people living in remote areas like Flinders Island won't receive state government support if their communities are left worse off as a result, state Treasurer Peter Gutwein says.
The Productivity Commission released a draft report earlier this month addressing opportunities for reform in regards to remote area tax concessions and payments.
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It recommended the zone tax offset be abolished, but noted that for low-income earners living on remote islands, this could "represent a more substantial loss" than it might in other remote areas.
Flinders Island and King Island residents are in Ordinary Zone B under the zone tax offset arrangement, entitling them to a base rebate of $57 with 20 per cent dependant loading.
"Treasury is still considering the commission's draft report," Mr Gutwein said. "However, to be clear, the Hodgman majority Liberal government will not support any recommendations that would see Tasmanians, regardless of where they live, worse off."
The federal government will consider the recommendations in the final report when it's delivered early next year.