Pitt backs away from GST change
QUEENSLAND Treasurer Curtis Pitt said he would need an “almighty convincing” to change his views on changing the GST, as he prepares to hand down his first Budget next week.
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QUEENSLAND Treasurer Curtis Pitt said he would need an “almighty convincing” to change his views on changing the GST, as he prepares to hand down his first Budget next week.
Last week, Mr Pitt told The Courier-Mail he would be “open to discussing proposed GST changes that don’t disadvantage Queenslanders”.
It followed ongoing discussions surrounding the Federal Government’s White Paper into tax reform, with the Abbott Government expected to ask the states to consider changes to the GST.
But yesterday Mr Pitt backed away from increasing the rate of GST, or broadening its base, but still did not rule out any adjustments.
“It would take almighty convincing to demonstrate just why we should need to change the GST,” he said.
“We are very willing participants in the White Paper process and tax reforms to ensure we get a system that works.”
He said the position of the Government had not changed. “We have no change to the base and no change to the rate of the GST as the starting point for our negotiations with the Commonwealth,” Mr Pitt said
EARLIER
POORER households would receive Commonwealth-funded compensation if states agreed to broaden or increase the GST.
The Abbott Government will ask the states to consider the proposal, plus whether they would forgo some Commonwealth payments, if they received a share of personal income taxes.
It comes as Queensland Treasurer Curtis Pitt appears for the first time to have opened the door to supporting changes to the GST.
“Our starting point is that we don’t support changing the rate or broadening the base of the GST, and this aligns with our election commitment for no new taxes, fees or charges in our first term,” Mr Pitt said. “We made this commitment to promote growth, encourage business investment and create jobs.
“We support the Commonwealth white paper processes on federalism and tax reform and we are open to discussing proposed GST changes that don’t disadvantage Queensland.
“Any clarification of roles and responsibilities between the Commonwealth and the states would be a necessary pre-condition to consideration of tax reform issues.”
FAIR’S FAIR: Abbott says states should be fair on GST discussion
The negotiations, which will include reforms to housing, health and education, will be nutted out at a leaders’ retreat later this month.
An updated draft copy of the Federation White Paper, obtained by The Courier-Mail, reveals further details about the GST dilemma, which centres on whether it should be redistributed differently or broadened to net more goods.
The draft said if the states agreed to broaden or increase the GST, the Commonwealth could quarantine some of the extra cash to compensate income-support recipients.
A greater share of GST funding would mean the Commonwealth could pay states less.
“Such a change would need to consider how and to what extent any compensation to taxpayers and income-support recipients would be funded,’’ the draft said.
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“Options could include a change to the current GST arrangements so that not all the additional GST flowed to states and territories, allowing some proportion to be used for compensation. There could also be a reduction in other Commonwealth grants to states and territories.’’
Financial Services Council policy director Andrew Bragg said yesterday the GST should be broadened and increased to 15 per cent, with low-income households compensated.
“Australia’s heavy reliance on company and personal taxation must come to an end,” Mr Bragg said. “GST must be part of the tax mix switch, including compensation for low income earners.
“A 15 per cent GST with a broader base would deliver $42 billion in additional revenue in 2015-16.”
The updated draft sets out an option for a GST floor, meaning the cash given to donor states would not fall below an agreed level. If the model was introduced this financial year it would gift WA almost $1.3 billion more.
It would come at the expense of NSW, Queensland, South Australia, Tasmania and the Northern Territory.
Queensland faces losing up to $300 million in GST funding under the floor plan. Western Australia, which has long complained about having to “donate” to other states would be the biggest winner in at least two options.
Prime Minister Tony Abbott and Treasurer Joe Hockey (above) have repeatedly said the GST would not be increased or broadened unless the states agreed. “We cannot change the GST without the states and territories,” Mr Abbott said in May.
The paper also flags giving states a share of personal income tax. The Government would reduce its rates and allow states to apply a surcharge. Another scenario would be similar to the German tax system where states are given a fixed share of taxation revenue and have more responsibility for services.
Australian Council for Social Service could not be contacted yesterday.
The Financial Services Council’s submission has proposed changes including:
• 22 per cent company tax rate by 2020.
• Lower income taxes.
• Abolition of state stamp duties/transaction taxes.
• A higher and broader GST increased towards the OECD average.
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