Thursday, September 17, 2015

Turnbull might take GST hike to the next election, says Frydenberg

Assistant Treasurer Josh Frydenberg has raised the prospect of the Turnbull government taking an increase in the goods and services tax to the next election.

Addressing a tax forum at the Australian National University and conceding that after the reshuffle due on Monday he might no longer have responsibility for tax, Mr Frydenberg said he had noticed a "change in the public's mindset" on the GST.

"I think people understand that there could be benefits that will come from its increase and also understand that other taxes would be removed or reduced, and that there would be more money for services such as health," he said.

"We kickstarted the debate through a discussion paper, which will morph into a green paper later this year, which will then morph into a white paper early next year."

"Our new prime minister Malcolm Turnbull is completely interested in all matters economic and brings to the job business experience, so I think it will be quite an exciting space for the government in the leadup to the election."

The previous prime minister Tony Abbott ruled out an increase in the GST in the leadup to the 2013 election and said he would only be prepared to take one to the 2016 election if the total tax take didn't climb.

NSW Premier Mike Baird pushed for an increase from 10 per cent to 15 per cent at a last month's treasurer's meeting to properly fund the health system and prevent state finances "tumbling over a fiscal cliff".

He was backed by South Australian Treasurer Tom Koutsantonis but opposed by Victoria's Tim Pallas and Queensland's Curtis Pitt, who instead proposed an increase in the Medicare levy.

An extension of the GST would need the support of all of the states and would need to get through the Senate.

Mr Frydenberg said for that reason he preferred a simple increase compared with an extension into exempt areas such as fresh food, health and education...

"You could just imagine the political consequences of having a broader GST apply to those areas," he told the forum. "We had it with the so-called bank tax on deposits. We would be told that every private school kid's parent would be paying more for their education, every person who goes to doctor would be paying more for their visit, people would be paying more to go to the local market. You could imagine the campaigns, and I think they are relevant considerations in a situation where a government doesn't have a majority in both houses."

Plans are well advanced to apply the GST to imported digital goods and to all imported parcels from July 2017, levelling the playing field between Australian and overseas suppliers.

"These changes mean that when a consumer is deciding whether to buy a good or service in a store or online, GST will no longer be a factor," Mr Frydenberg said. "This shows that it is possible to come together to deliver important reform. We've done it before, so it is now a question of what next."

Treasury official Russ Campbell told the forum the tax on the sale of overseas supplied digital goods might well be collected from so-called "marketplace aggregators" such as Google Plus rather than the suppliers themselves.

In The Age and Sydney Morning Herald