GST, Medicare levy hike still live options

The plan to tax digital goods, which Hockey said has the potential to generate billions of dollars in revenue, follows moves by the government to crackdown on profit-shifting practices by multinational companies that employ the so-called “double-Irish sandwich” method of funnelling profits through its Ireland-listed company in order to pay a lower tax rate in Australia.

Mr Hodgman and other state leaders will attend a retreat with Prime Minister Tony Abbott this week. ACT Chief Minister Andrew Barr has urged his colleagues not to rule anything in or out on tax reform at a leaders’ retreat in Sydney on Wednesday.

A plan by New South Wales Premier Mike Baird to lift the GST to 15 per cent – with accompanying compensation for the least well-off – and an approach to double the Medicare levy by Victorian Labor Premier Daniel Andrews and Queensland’s Annastacia Palaszczuk, were both sent off for further study.

So how will this work?

‘What we have today is a very sensible proposal from the NSW Premier following on from the sensible suggestions from the South Australian Premier, ‘ he added.

Leading economist Saul Eslake last year said Tasmania could benefit from a change to the GST rate as long as health was exempted.

GST is a value added tax of 10% charged on most goods and services, introduced by the Howard government in July 2000. The levy was increased from 1.5 per cent to 2 per cent to help pay for the National Disability Insurance Scheme.

“That means being bold enough to embrace GST reform to abolish a range of inefficient state taxes”.

“But that’s what we did talk about and we’ve committed to continue talking about them”, he said.

The meeting has been called after Federal Treasurer Joe Hockey slashed $80 billion in funding to the state governments in his first budget in 2014.

“[The GST] hurts those people on the lowest income the most because it represents a bigger proportion of their income”, Ms Aitchison said. As the review stated, “It would, therefore, be prudent to design a tax system now that would be capable of delivering higher tax revenues efficiently in future decades, should that prove necessary“.

Tasmanian Premier Will Hodgman is opposed to any rise in the GST.

“What we need to do is to make sure that government isn’t putting greater pressure on the household budget”.

The details will be thrashed out at a meeting of the treasurers scheduled for August but the aim is to apply the tax to items values as low as $20. There was also recognition of the need to consider extending Medicare to cover treatments in hospitals, based on efficient pricing.

The summit said the focus of Federation reforms must be health, education, housing and infrastructure and in a significant development, leaders agreed to transfer responsibility for vocational and education training to the Commonwealth so long as the states remained as TAFE providers within a new national system.