The Federal coalition has again rejected calls by cash-strapped Western Australia to lift the rate of the GST but still plans to include the impost in a broader review of the taxation system.
The Tony Abbott-led government will unveil a discussion paper on tax reform in coming months inviting comment on the GST, ahead of a white paper due before the end of its first term.
WA Premier, Colin Barnett, says GST revenues flowing to the states and territories from the consumption tax aren’t growing fast enough to fund basic services like health and education.
He acknowledges Abbott made a promise during the recent federal election not to lift the 10 per cent GST or broaden its base to include food and health services before the next poll.
But Barnett believes most Australians would be prepared to “cop” a rate rise to 12.5 per cent if it meant delivering vital state services.
WA was this week downgraded by global credit ratings agency Standard & Poor’s for showing “limited political will” to adopt measures to increase state government revenue.
ACT Labor Chief Minister, Katy Gallagher, supports the WA leader’s call for a debate on the GST.
“If there is to be any rational discussion about the GST, all states and territories need to back in any federal government that’s prepared to examine and look at whether the rate does need to go up, or exemptions need to change,” she said.
Treasurer, Joe Hockey, says there will be “no change to the GST, full stop, end of story”.
While states like WA face “structural challenges” to fund schools and hospitals, there is no easy solution.
“Sometimes it’s too easy to default to a single silver bullet solution when in fact the solution needs to be much broader and far more sophisticated,” Hockey said.
Acting Labor leader, Chris Bowen, says the ALP remains opposed to any change to the GST.
Tasmanian Labor Premier, Lara Giddings, spoke with the prime minister by telephone on Friday and urged Abbott not to change the way the GST revenue is distributed.
WA and Queensland say the funds should be paid out on a per capita basis, but Giddings says this would leave Tasmania $700 million short.
“Liberal state governments around this nation have to get their hands off Tasmania’s fair share of the GST,” she said, adding she also did not support any change to the base or rate of the tax.
WA Liberal Senator, Alan Eggleston, supports a review of federal state financial relations, including the GST, to fund roads, bridges and other infrastructure.
“The GST in its present form needs to be discussed,” he told AAP.
Acting Queensland Premier, Jeff Seeney, says the Newman government won’t push to change the GST.
But Liberal Victorian Premier, Denis Napthine, wants a larger slice of the GST pie.
South Australia, like Tasmania, opposes any changes to the distribution, base, or rate of the GST.
Northern Territory Treasurer, Dave Tollner, said changing the GST could hurt Australia’s exports.
WA this week lost its coveted triple A credit rating when it was downgraded to AA+.
AAP
