This was published 6 years ago
Commission recommends some GST changes. They're not good for the ACT
By Steven Trask
Changes to GST proposed by the Productivity Commission would reduce the liveability of the capital city, the chief executive of the Canberra Business Chamber says.
On Wednesday a landmark report by the commission came to light, including recommendations for sweeping GST reforms that could cost the ACT $970 million by 2026-27.
Chief Minister and Treasurer Andrew Barr said his government opposed any changes that would hurt the territory.Credit: Sitthixay Ditthavong
Prime Minister Malcolm Turnbull was quick to scotch the recommendations, saying no jurisdiction would wind-up worse off as a result of GST changes.
Canberra Business Chamber chief executive Robyn Hendry welcomed Mr Turnbull’s comments as a sensible move in light of recent tax reforms in the ACT.
“[Under the commission’s changes] the liveability of the city would be reduced because we couldn’t afford the things we currently do,” she said.
“We would either have to reduce services or we would have to tax more.
“We’ve already had significant increases in tax and any further pressure in that regard would have significant downward impact on economic growth.”
Chief Minister Andrew Barr said the ACT government was against any changes that would hurt the territory.
“The ACT would oppose any change to the way that GST is redistributed that would leave the territory worse off,” he said.
“The current model aims to ensure that Australians, no matter where they live, have access to the same quality of services.
“Under the current model, the ACT has been somewhat compensated by the lack of infrastructure funding the territory has received in recent federal budgets.”
"Treasurer Scott Morrison ordered an independent inquiry into the formula used to distribute GST revenue to the states and territories in April last year, after Western Australia's GST tax take fell to 34 cents for every dollar it contributed in 2016.
To compensate WA, the commission recommended changing the formula to bring all states up to the average pre-GST revenue level, with the remaining GST distributed on a per capita basis.
Such a change would take funding away from Victoria, Queensland, South Australia, Tasmania, the ACT and the Northern Territory, leaving only WA and NSW better off.