Jeff Kennett gets behind push to broaden the base for GST

FORMER Victorian premier Jeff Kennett has backed a broadening of the GST.

FORMER Victorian premier Jeff Kennett has backed a broadening of the GST as part of a two-step plan to deal with the federal deficit and increase revenue for the cash-strapped states.

Mr Kennett yesterday backed the imposition of the tax on a broader range of goods and services rather than increasing the rate. He told The Australian that the proceeds from a broader GST should initially be used by the commonwealth to pay down its liabilities, which would prevent the Abbott government from hacking so heavily into state revenue streams.

Mr Kennett also accused Canberra of failing to prepare carefully enough for government.

He said this had delayed debate about the future of the GST and the broader issue of funding the states.

“I have advocated for a long time, whether you like it or not, we should broaden the GST,’’ he said. “Both parties said no to it in the election campaign and that is to Australia’s detriment. If you applied it to everything you would probably raise another $40 billion.

“You could make some allowance for those in special need and still have $35 billion up your sleeve.’’

Mr Kennett, who is the most reformist premier of the modern era, having transformed the Victorian economy between 1992 and 1999, said Abbott government’s lack of a plan upon being elected had delayed the process of reform. Despite this, he supported many of the budget initiatives, although a more decisive plan on taxation could have seen the deficit and rising debt dealt within 18 months.

He said it would be more equitable to keep the GST rate at 10 per cent but broaden the impact of the GST.

But Victorian Premier Denis Napthine argued that the GST should neither be broadened nor the rate increased.

Instead, he said, it would be in Victoria’s best interests to improve the distribution of the tax collected from his state. Victoria gets 88c in the dollar.

“What we want in Victoria is our fair share of GST,’’ he said.

Former prime minister John Howard said yesterday an ongoing debate about the GST was inevitable.

The push for a higher rate or a broader base for the tax will divide the premiers, who will meet at the weekend to discuss their responses to the federal budget.