Is Tony Abbott planning to raise the GST?

“WHAT Tony Abbott wants to do ought to cause the hairs on the back of Australians’ necks to stand up.” The PM’s opponents say he is gearing up to raise the goods and services tax.

IS TONY Abbott about to raise the GST?

Labor has accused the Prime Minster of using coded language to lay the groundwork for raising the goods and services tax.

Shadow assistant treasurer Andrew Leigh has seized on a speech given by Mr Abbott at the weekend in which he said the “dog’s breakfast” of federation needed to be fixed.

Although he didn’t mention the GST explicitly, Mr Abbott said his government would be ready to work with states on reforms to improve their tax base — including changes to indirect taxes.

Mr Leigh said the Prime Minister had “resorted to code language” on his plans to increase the GST.

“What Tony Abbott wants to do ought to cause the hairs on the back of Australians’ necks to stand up,” he told reporters in Canberra.

The government had stripped $80 billion in health and education funding in the May budget “to starve the states into submission, so they go along with what the Liberal party has always wanted, which is a higher GST,” he said.

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In a speech in Tenterfield on Saturday night, Mr Abbott said he wanted to resolve the mismatch between what states are expected to do and what they can afford.

The states spend a combined $230 billion a year but only raise $130 billion from their own taxes and charges.

Mr Abbott said playing a “rule in, rule out” game would only generate fear but emphasised his government was determined to avoid increasing the overall tax burden.

“The Commonwealth would be ready to work with states on a range of tax reforms that could permanently improve the states’ tax base — including changes to the indirect tax base, with compensating reductions in income tax,” he said.

Speaking in Parliament today, Mr Abbott made clear his aim was GST reform — but not yet.

Mr Abbott invited Opposition Leader Bill Shorten to join a “mature” discussion on Commonwealth/state relations, with tax changes on the agenda.

Mr Shorten had reminded Mr Abbott his election promise of no GST change this term in office.

“I want to assure members opposite that we will certainly keep our commitments,” he said.

“But on the subject of the GST, as is well-known, any change to the GST is a matter for the States.”

The Prime Minister in Question Time.