States return to GST battle

THE Coalition states have cited the audit commission findings as evidence of the need for fundamental tax reform.

THE Coalition states aggressively pursuing a better deal under the GST carve-up have cited the audit commission findings as evidence of the need for fundamental tax reform.

But only West Australian Premier Colin Barnett has opened the door to the states getting access to personal income tax, albeit with a potential trade-off of abolishing other taxes.

NSW Treasurer Andrew Constance yesterday said calls to give the states a greater share of GST on a per capita basis was “proof the federation is broken”.

Mr Constance repeatedly refused to be drawn on recommendations that the states be given limited access to the federal government’s personal income tax base. “This clearly shows duplication between the states and the federal government,’’ Mr Constance said of the audit report.

“When it comes to GST, NSW is not getting its fair share.”

He was joined by Victorian Treasurer Michael O’Brien, who said moving the states to a per capita GST distribution system endorsed his own policy position.

But, facing an election on November 29, he did not address the issue of income tax, declaring that some of the proposals backed by the commission appeared to be beyond implementation.

“Other proposals appear, on initial reading, to be difficult to implement, have potential adverse consequences or would not otherwise be supported by Victoria,’’ he said.

The three states’ position on the GST and the general uncertainty of how the proposed new era of federalism would function was reflected in the responses of the other states.

Mr Barnett said he saw merit in “getting rid of overlap and waste and by better defining commonwealth-state responsibilities”.

“I would also welcome the states having some access to income tax revenue — although I accept that this would probably involve abolishing some existing state taxes,” he said.

Queensland Treasurer Tim Nicholls said the Abbott government was facing the same pressures his government had experienced when it was elected.

While repeating the federal Coalition’s position that the audit commission’s recommendations would not necessarily become policy, the Hodgman government in Tasmania made it clear it did not support much of the ­report.

The Tasmanian Chamber of Commerce and Industry last night said scrapping the subsidies for freight and vehicle movements across Bass Strait would devastate exporters, manufacturers and wider businesses, and would be a clear, unjustified breach of Coalition election ­policy.

Acting South Australian Labor Premier John Rau said the idea of the states being granted access to income tax would not become law.

Northern Territory Treasurer Dave Tollner warned an overhaul of the GST could leave the territory $2.5 billion worse off.

Additional reporting: Anthony Klan, Michael McKenna, Amos Aikman, Michael Owen, Matthew Denholm