The Australian Capital Territory imposes the second heaviest tax burden on business in Australia according to a new report Business Bearing the Burden 2010 released today by free market think tank the Institute of Public Affairs (IPA).

A major contributing factor to the territory's high tax result is its burdensome property tax structure, IPA said.

The author of the report, IPA Research Fellow Julie Novak, said "the ACT is reasonably competitive on property taxes, due to a relatively high tax threshold. Yet it's on land tax and conveyance duty that the territory lets itself down."

"The ACT is estimated to impose the second highest property taxes in the Commonwealth, and is also uncompetitive on other stamp duties."

"It is in these areas of business taxation that the Stanhope government must prioritise its tax reform efforts in the short to medium term," Ms Novak said.

Businesses in Canberra face a double fiscal crunch of high taxes and ongoing budget deficits over the forward estimates.

"The uncompetitive tax position of the ACT cannot be separated from the overspending of the territory government during the past decade," Ms Novak said.

"There is also the risk that the upcoming territory tax review will recommend additional, not fewer, taxes on Canberra's business community."

"To create space for more tax reductions that boost business growth and therefore create new jobs, the ACT has no option but to more vigorously explore deep spending cuts."