GST: Jay Weatherill’s tax hike plan sparks interest of Federal Government and ACT Labor
A radical GST proposal from South Australia’s Labor Premier to pay for health costs has sparked the interest of the Commonwealth and some of his state and territory colleagues.
Jay Weatherill has called for the GST rate to increase to 15 per cent as part of a broader tax plan to be put to his state and federal counterparts formally in a fortnight at a Council of Australian Governments (COAG) meeting.
Mr Weatherill wants to let the Commonwealth keep the extra GST money — about $34 billion — which he suggested would be used to cut company tax.
He then wants the states to get a share of about a fifth of the income tax raised by the Commonwealth.
ACT Labor Chief Minister Andrew Barr said Mr Weatherill’s proposal was worth considering.
“The latest one around a share of income tax is interesting and attractive and should be examined,” Mr Barr said.
“Whether we need to increase the GST or we can look at a range of other taxes I think we still need to consider and look at the modelling, look at the impacts on our economy particularly on low income Australians.”
Federal Labor is firmly opposed to any increase to the GST but Mr Barr said he “wouldn’t stand in the way” if certain conditions were met.
“If the GST’s taken to an election, the Australian people vote for it, there’s a compensation and a reform package that the Australian Senate supports as well, then we wouldn’t as the ACT Government use the current legislative framework that is this intergovernmental agreement to block that,” he said.
But he said he believed there are other taxes that could be increased to address the revenue shortfall of the states and territories.
Federal Treasurer Scott Morrison has promised to consider Mr Weatherill’s GST proposal and was joined by Finance Minister Mathias Cormann in commending the Premier.
“It’s very good on Jay Weatherill to engage positively and constructively in this debate about how our tax system can be improved,” Senator Cormann told Sky News.
Yesterday, New South Wales Treasurer Gladys Berejiklian welcomed Mr Weatherill’s thoughts.
She said her state’s first priority was addressing the looming gap caused by the growing cost of health.
Ms Berejiklian said the State Government believed the best way to cover that shortfall was to lift the GST to 15 per cent — but compensate all households with incomes of $100,000 or less.
The Victorian Labor Government has repeated its opposition to raising the GST rate.
“The Andrews Labor Government, while open to discussing various views that are being considered in the tax debate, remains opposed to an increase in the GST rate,” a spokesperson said.
“We believe that a modest rise in the Medicare levy is a better and fairer way of raising revenue than an increase in the GST — which is a regressive tax that impacts low income earners more.”