Pleas for a political truce with the Labor states on GST ignored

Date
    November 1, 2015
    The Age

Prime Minister Malcolm Turnbull is not afraid to raise the GST as part of a broader tax reform package, Arthur Sinodinos says - but the Cabinet Secretary has warned the states would have to be at least be "neutral" and not "hostile" to the idea.

However, the prospect of a political truce appeared unlikely with Victorian Labor Premier Daniel Andrews immediately restating his opposition and vowing to fight any increase to the consumption tax in the lead up to the next election.   



News Corp reported on Sunday that Treasury has offered the Coalition four main GST reform options.

These were previously provided to former prime minister Tony Abbott and include:

·      raising the GST to 15 per cent and impose it currently exempted goods and services including food, health and education

·      raising the GST to 15 per cent but continuing the exemption on fresh food but not on health and education

·      raising the GST to 15 per cent

·      raising the GST to 12.5 per cent

Cabinet Secretary Arthur Sinodinos said the new prime minister was keen to maximise his political capital and use it to win the consent of the people for tax reform at the next election.

"If you're someone like Malcolm Turnbull if you want to do something substantial you've got to do it quickly and upfront," Senator Sinodinos told Sky.

"You have to do it soon in the context of putting stuff to an election rather than seeking to foist something on people before an election."

Any tax increase would involve other tax trade-offs, possibly clamping down on superannuation concessions for the rich and potential tax incentives for the lower paid. Senator Sinodinos stressed the need for any tax package to be fair and share the burden of reform equally between the wealthy and those less well-off.

Senator Sinodinos said the Coalition was conscious of fighting for higher consumption taxes and against the Labor states and federal opposition.

"We have to make sure that in the run-up to the election, states are at least neutral on the issue as opposed to actively hostile," he said.

But a spokesman for Victorian Labor Premier Daniel Andrews said on Sunday he would fight any proposal to increase the GST from 10 per cent.   

"Simply jacking up the GST to 15 per cent is not genuine reform. The GST is not a fair tax, it has no regard for a person's capacity to pay," the spokesman said.

But Fairfax Media understands that if Mr Turnbull were to win an election on the issue the Victorian Government would respect his mandate.

Opposition leader Bill Shorten told reporters before flying out on a four day visit to Pacific nations, that federal Labor would also oppose a hike in the GST.   

Speaking at Essendon airport on Sunday morning, Mr Shorten said a hike in the GST would predominantly hit low-to-middle income earners.

"The truth of the matter is people with lower incomes spend more of their income on the cost of living and the items people need just to get by," Mr Shorten said.

"This is going to squeeze people already finding it hard to save."

He added that if the government were going to compensate people for a GST-hike then the question had to be asked: "why increase the GST to begin with?"

Mr Shorten said instead the government should seek to cut back on superannuation concessions for high income earners and to draw more tax revenue from multi-national companies.   

bogarde73 wrote on Nov 1^st, 2015 at 11:07am:


I would think that a more moderate approach would do the job and also look at collecting a lot of the tax being avoided legal or not and taxing the multi nationals a reasonable amount.

We don't really have an income problem it is just that we don't bother to collect the money which should be paid.

Labor voter wrote on Nov 1^st, 2015 at 1:19pm:




Rubbish - you can't buy many of the things you want here -

a lot of stuff is only available from Ebay.

Swagman wrote on Nov 1^st, 2015 at 11:43am:

No, it was the structural Budget deficit H&C created with their profligacy building in tax cuts and wealthfare from revenue from a necessarily temporary boom. The boom bust in 2008 and so the boom revenues disappeared but not the boom spending. Gillard/Swan cut some of the profligacy back, not abbott or Malodorous.

The real estate boom H&C fanned and fed with tax cuts and pork left a highly indebted private sector facing bleaker times after the boom. Hence we see the present low confidence levels.

Payment back of the debt took place over a long time. H&C only played a small part in that. Geez the Libs here are dumb!

Swagman wrote on Nov 1^st, 2015 at 1:41pm:


The structural Budget deficit the gift that keeps taking.

The deficit that is passed on to someone else.

In the Howard years they managed to structure our economy to be reliant on the greatest boom in memory to break square. Obviously that means that the economic parameters returning to more normal values would leave a shortfall of income.

The Howard government spending like drunken sailors has left us in the lurch. 

Swagman wrote on Nov 1^st, 2015 at 1:41pm:


lefty spin? .... so you think someone works on commission only should budget as if their commissions remain at their best rates ever?

John Smith wrote on Nov 1^st, 2015 at 10:28am:



Another class JS lie based on his ignorance. Stamp Duty was NOT included in the taxes to be removed. Those taxes that were to be removed - have been. Costello threatened to cut GST payments off from states that were being slow on it. Suddenly, the job was finished.