Monday, December 17, 2012
State Treasurers are to push for the first significant extension of the GST as a new international survey finds its earning power embarrassingly low.
The OECD survey, Consumption Tax Trends 2012 finds Australia’s GST accounts for just 14 per cent of nationwide tax collections, compared to a average among developed nations of 19 per cent. The United Kingdom’s Value Added Tax brings in a more typical 17 per cent. The New Zealand GST brings in 27 per cent.
Among developed nations only Canada, Japan and Switzerland charge less GST than Australia. The typical rate is 18 per cent, almost double Australia’s 10 per cent.
Ahead of Monday’s meeting in Canberra Treasurer Wayne Swan has attempted to head off a push by state Treasurers to extend the tax releasing figures showing it hits low-income Australians much harder than others.
“We don’t support hitting those who can least afford it to bankroll somebody else’s tax cut,” he said. “It is wrong to pretend that jacking up the GST is the holy grail of tax reform. While it has become an accepted part of the tax mix and its integrity should be protected, it is a regressive tax – those on lower incomes pay a larger proportion of their incomes on it than those on higher incomes.”
NSW Coalition Treasurer Mike Baird and South Australian Labor Treasurer Jack Snelling will present a united front acknowledging the Commonwealth is unwilling to boost the GST, but asking it instead to extend it to privately imported parcels worth $500.
If adopted the proposal would not only apply the 10 per cent GST to those parcels for the first time but would lumber the senders with the administrative costs of opening and taxing the parcels...
“Ernst & Young say before costs the measure would raise $2.5 billion for the states over the next three years,” Mr Baird said. “If we can pass those costs on to the suppliers it could well be $2.5 billion in net terms.
“It’s an essential reform. It’s not popular, but it’s the right thing for my state and the country. When the GST was first envisaged on-line retailing wasn’t growing at 25 per cent per annum as it currently is,and physical retailing wasn’t flat as it currently is. It’s about bringing the GST into the modern age. “
“All of us have put this to our cabinets except for Western Australia, which is about to have an election.”
The Australian National Retailers Association released calculations showing overseas retailers were set to capture $2.7 billion or 8 per cent of Christmas spending. Much of it would escape the GST, which at present is only applied when an incoming parcel is valued at $1000 or more.
“This has very real implications for the states which will be hundreds of millions of dollars poorer with no GST collected on these goods. This means schools hospitals, roads to families across the country,” chief executive Margy Osmond said.
The Treasurers will attempt to pin the Commonwealth to a timetable to cut the threshold to $500. The Productivity Commission, the low Value Parcel Processing Taskforce and the Greiner Review of GST Distribution have all found in favour of cutting the threshold if a way could be found to shift the processing costs to the senders.
Mr Swan will get little joy from the states on his demand they wind back stamp duties and so-called nuisance taxes. They will suggest he first hands them several billion dollars of Commonwealth income tax as a replacement.
In today's Age
. Treasury to retailers: You'll force up rates
. Why the GST is failing, and why it's hard to fix
. How Australia compares on tax, graphically