COAG to bring tax into modern age: Baird

This is a furphy.

“Now he’s doing Tony Abbott’s bidding for him with this simplistic proposal to bump up the rate of GST – increasing a regressive tax that hurts those who can least afford it”, says Mr Foley. Given the Premier’s proposal would increase taxes by about AUD30bn, or AUD3,000 per household, each year, it is clearly not a revenue-neutral proposal.

South Australian Premier Jay Weatherill said raising taxes was not something politicians usually like to talk about, but the meeting had put forward a few bold ideas. “Australia needs tax reform, not tax increases”. Compensation in welfare payments and tax breaks to lower income earners would cost $171 billion.

Victoria Premier Daniel Andrews rarely sees eye to eye with Tony Abbott, and the GST rise is no exception. According to modelling done by NSW, on current projections “by 2030 the annual budget deficits across the commonwealth and states will be about $45 billion, of which about $35 billion will be generated by health”.

An increase in the tax-free threshold would put more money in the pocket of practically every single working person in Australia because you can earn more money before the government reaches out with its sticky fingers.

“Only then should changes to the scope of the GST be considered”.

On the other side, the Opposition is standing against any changes to the GST despite widespread acceptance that it is efficient way to raise more revenue. “Governments and stakeholders must remain open to looking at the tax system as a whole, and considering all the options which could deliver the optimal system for the 21st century global economy”. It’s not simply a matter of prices going up.

“Because in the end if there is to be substantial change here in terms of who does what, if there is to be substantial change here in terms of the tax mix, we need to have something approaching a consensus”, he said.

Collecting GST on imported goods has long been debated, since internet shopping grew in prominence, but has repeatedly been seen as not cost effective.

ACCI, together with the Business Council of Australia (BCA) and the Australian Council of Social Service (ACOSS), has released a set of tax reform objectives, which focus on the need for bi-partisanship and inter-jurisdictional cooperation. A conga-line of economists (now there’s an image) have also stepped out in favour of it over recent years. Why not get this sorted out once and for all with a sliding scale of increases over time?

I’m not against the GST rising as such whether it’s to 12.5% or 15%.

The real hurdle here, and the factor that won’t have the nation holding its breath this week awaiting a deal, is that government leaders need to strike an agreement.

That’s what the Prime Minister, Premiers and Chief Ministers are trying to work out at their first “leaders retreat”. So there is a few momentum, even if it’s faint, ahead of the leaders gathering in Sydney tomorrow.