The agenda paper prepared for Thursday's treasurers' meeting ought to come with a big red stamp that reads "danger".
All but one of the options listed for boosting the GST are fraught. Each requires "compensation".
If the GST was lifted to 15 per cent, households earning up to $100,000 would need to be completely compensated. Households earning up to $155,000 would need to get back "at least half of the extra GST revenue".
It would end up costing "at least half of the extra GST revenue".
The real danger is that "at least half" would be only the beginning. If the treasurers so much as mention compensation in public, they run the risk of being heard to make commitments.
"Making commitments now risks overcompensation for households and adding significantly to the cost of household assistance," the paper warns.
Lifting the GST to 15 per cent would raise $32.5 billion, the Treasury says. But $16 billion to $17 billion of it would be given back in compensation, which would be messy...
Some Australians would get increased cash benefits: pensions, family payments and the like. Others would get tax offsets. The retirees who neither pay tax nor get get benefits would get a seniors concession allowance. Others who missed out would get a "transitional payment".
And this time it would be harder to convince people the compensation would last. When the Howard government introduced the GST in 2000 it pushed up family allowances to compensate. Fifteen years on, the Turnbull government is planning to wind back those increases because it faces budgetary problems.
The only option for boosting GST revenue that wouldn't need compensation is extending it to financial services. It wouldn't raise much either, but the people it would hit most would be too well off to need compensation.
Victoria's option of lifting the Medicare levy from 2 to 4 per cent of income is simple by comparison. It would raise $15 to $16 billion, about the same as would the GST hike rise after compensation, but because the low-income earners are already excluded from the levy, it could be done without paying anyone anything.
It's looking like a long meeting.In The Age and Sydney Morning Herald