May 19, 2014

Crikey Clarifier: what’s the mechanism for hiking the GST?

Tony Abbott has goaded state governments into lobbying for hiking the GST. Crikey intern Danielle Thompson looks at the mechanisms for change.

Prime Minister Tony Abbott says he makes “no apologies for wanting the states to be grown-up, adult governments that take responsibility for the programs that are theirs, for the institutions that they run”. With $80 billion wiped from state revenue, the GST is now firmly back on the table.

After a meeting of Australia’s premiers yesterday, there seems little desire to raise the GST or broaden the base. But New South Wales Premier Mike Baird says states “simply can’t afford” the new budget arrangement. Victoria’s Denis Napthine is hoping for a “fairer” distribution of GST so Victoria could receive a higher percentage, but he says he is not interested in changing the tax.

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6 thoughts on “Crikey Clarifier: what’s the mechanism for hiking the GST?

  1. max steinman

    I haven’t read this article but a ctrl+f for “regressive” without results tells me that I probably don’t need to.

    Raising the GST is regressive taxation, it will contribute to the already well established exponentially increasing global inequality, we need good progressive taxation systems more than ever.

  2. Glen

    Thanks Danielle. I guess you’ve made it clear enough, but to reiterate, the GST is a creation of federal legislation, and can only be changed by federal parliament. The agreement with the states has no practical enforceability. No state could succeed in trying to enforce the agreement before any court if federal parliament decided otherwise.

    In the light of the Abbott government’s repudiation of federal-state agreements on health and education, it is extraordinarily disingenuous to pretend that the GST agreement somehow binds the commonwealth.

  3. AR

    VAT,MOMS,GST,etc – consumption taxes are of supreme importance in the euroid context, esp the morally malleable southern societies were tax avoidance is the only sane response, predicated on graft & corruption to oils commerce & daily life.
    In other words, they are an alternative, not an addition, to income tax.
    This way, no matter how lceverly hidden, income when spent is taxed. Simple.
    To have both is a typically constipated political/bureaucratic response, unable to let go nanny’s hand of income tax for the brave adult world of pay as you spend.

  4. drsmithy

    No need to touch the GST. The States could bring in a land tax, which is about the fairest and most equitable tax base there is.

  5. David Penington

    Senator Ian Macdonald wants to extend the GST to basic foods, which is highly regressive. I notice he doesn’t want it on private school fees or cosmetic surgery.
    Putting a GST on overseas credit car, paypal, etc payments would help rebalance the local retailer and producer tax disadvantage and would be sensible if it could be achieved.

  6. David Penington

    credit card not car.

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