Monday, May 20, 2013

Every day it's a getting closer, more GST

Labor managed to have a tax review without talking about it. The Coalition has promised not to touch it in its first term.

But NSW Premier Barry O'Farrell says it’s time for a “dinkum” discussion. He says we should consider lifting the rate of the goods and services tax beyond 10 per cent.

The rate can only be varied if all of the states agree and if the Commonwealth parliament passes legislation. Opposition leader Tony Abbott has said he will allow consideration of the GST in the tax review he will commission should he win the next election, but that any changes would be put to the people first at a subsequent election.

Mr O'Farrell said a higher GST could be used to remove "anti-economic" state taxes such as those on payrolls and investment.

"People know the current tax system is failing. There are regressive taxes that we can only eliminate if we are compensated, and the best way to do that is through the GST," he told Sky News on Sunday.

"All options should be on the table, broadening the base, looking at the rate and also the rebates back to the states"...

Assistant Treasurer David Bradbury said the Coalition would face mounting pressure from Liberal states to increase the rate.

"What Mr O'Farrell did was open the curtains on this so-called tax review, which we know is going to be nothing other than a GST review." he said. “All options should be on the table means up with the rate, out with the base. It means tax on things like fresh food, it means health, it means education."

Victorian premier Denis Napthine poured cold water on the idea of a coordinated move saying a tax review was not high on his list of priorities.

‘‘I am more interested in getting funding for East West Link Stage 1, that is my first priority and then getting on with the Metro Rail tunnel and Port of Hastings,’’ he told reporters on Sunday.

Victoria wanted a fairer share of the national GST pool rather than a higher rate.
Although forbidden from considering a change to the GST the 2010 Henry tax review published a table showing that increasing the rate of would be one of the least damaging ways of raising more tax. The least damaging was an increased resource super profits tax.

Shadow Treasurer Joe Hockey confirmed Sunday the Coalition would support the government’s decision to means test the private health insurance rebate. “We will legislate as an emergency measure,” he told the ABC. As recently as February he had been promising to restore the full rebate. “We would like to see that means test gone because we believe in a universal health system,” he said at the time.

In today's Sydney Morning Herald and Age

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. Why the GST is failing, and why it's hard to fix

. How Australia compares on tax, graphically

. State treasurers to Swan: Collect more GST