State premiers should be stripped of their power to block changes to the goods and services tax as part of a plan to kick-start tax reform, a former premier has told the AFR tax summit.
John Brumby, Victoria's premier from 2007 to 2010, told the summit that when he reviewed the distribution of the GST for the Gillard government in 2011, he was given explicit instructions not to investigate raising the rate.
He said it was "nonsense" to suggest the rate couldn't be changed without the agreement of every single state as had been claimed by the former treasurer and prime minister.
"That may well have been the arrangement under an intergovernmental agreement, but it needn't be in the future," he said.
"If you think about it, everything else we do goes through the parliament with a simple majority, an absolute majority. If it's constitutional, it's a two-thirds majority.
"What if you got every state and territory in Australia across the line except for the Northern Territory and Tasmania, constituting less than 5 per cent of the nation's GDP? Could they hold up the whole of the nation? I think the threshold needs to be lowered to a two-thirds agreement of the states and territories."
He also rejected the notion that boosting the GST would especially hurt low income earners...
"The UK has done some excellent work on this. A large cohort of the people who are poor are actually university students, and they are not poor all their life. We need to rethink just how regressive the GST is."
The head of the Australian Council of Social Service, Cassandra Goldie, said she would not be "verballed" into saying she supported increasing the GST.
She would be prepared to consider it as part of a "grand bargain" to reform Australia's tax system.
"Before we look at that, we should look at broadening the base of the income tax and cutting superannuation tax breaks," she said.
Grattan Institute chief executive John Daley told the summit the simplest quick tax reform for the Turnbull government would be to scrap the generous $180,000 annual limit on the amount individuals could contribute to super from post-tax income.
"Anyone who can pay in that much per year out of post-tax income doesn't need help with their retirement," he said.
He proposed instead a lifetime cap of $650,000 indexed to inflation.
Prime Minister Malcolm Turnbull has denied reports that he has instructed the Treasury to stop work on the the tax paper, pending a "reset".
However, Treasury staff say they have been asked to stop and rethink tax "from the ground up".
Mr Daley told the summit he guessed that super would be "at least, to some extent, the first against the wall".
South Australian Premier Jay Weatherill told the summit that "very substantial opportunities had opened up" with the ascension of Mr Turnbull.
"He is talking about respecting the intelligence of the Australian people. I haven't heard those words since Bob Hawke," he said.
"We are in a period where we are relatively free of elections. I talked to the Prime Minister last Friday, and I have to say I am encouraged. We have the potential to strike a grand bargain."
South Australia has proposed extending a GST-style tax of 10 per cent to banks, to be charged on the margin between the cost at which they borrow money and the price at which they lend it. It would apply only to consumer and not to business loans.
It would raise $3 billion to $4.5 billion per year for the states, but would have to be administered nationally, to prevent tax competition between the states.In The Age and Sydney Morning Herald