GST on feminine hygiene products to be axed

State and territory treasurers have unanimously agreed with the federal Coalition to drop the GST on feminine hygiene products.

Treasurer Josh Frydenberg.

State and territory treasurers have unanimously agreed to axe the GST on feminine hygiene products from January 1 next year.

In August, then treasurer Scott Morrison vowed to scrap the tax, after years of wrangling with the states and territories and campaigning from Labor, the Greens and women’s groups to have women’s hygiene products exempted from the GST.

Other essential items, such as fresh food and medical products, are not subject to the 10 per cent tax which was introduced by the Howard government on July 1, 2000.

The move had required the agreement of the states and territories, who signed off on it at a COAG meeting of treasurers in Melbourne this morning.

It will cost the GST pool approximately $30 million a year.

“In terms of when it would come off, what the treasurers and I have been discussing is from the 1st of January next year,” Mr Frydenberg told Sky News.

“The state and territory treasurers had a very good dinner last night where we discussed this issue, and there seems to be strong agreement that we should proceed to remove the GST from feminine hygiene products,” he told ABC radio.

Mr Frydenberg said money had been a factor in persuading the states and territories to abolish the tax.

“I mean it’s around $30m a year, but at the same time, people want to ensure that we don’t pick and choose the items that come out of the GST base, and I think it has been a desire just to maintain stability with that, and that has probably prevented action before today.”

Mr Frydenberg said the states were greatly benefiting from the Coalition government’s extension of the GST to online purchases and enhanced compliance activities which will see them benefit by $6.5 billion over the forward estimates.

“So I don’t think we need to pursue other areas where we need to increase the GST,” he said.

“I think what they’ll just need to do is to take that on the chin and move forward.”

Support from NSW

NSW Treasurer Dominic Perrottet said his state had supported removing the GST on feminine hygiene products for some time.

“Now, importantly from the discussions that I’ve had with each of the state and territory treasurers, there is widespread support to remove that tax,” Mr Perrottet told Sky News.

“The cost to NSW is around $10m a year, but for a good cause, and I think it’s something that should have been done some time ago.”

‘It should have happened long ago’: Labor

Labor frontbencher Ed Husic said it was a good outcome, but a long time coming.

In May 2015, then treasurer Joe Hockey agreed to lobby the states on the issue during an ABC Q&A episode, but the Coalition did not pursue the policy due to internal opposition and objections from the states and territories.

“It’s something that as you’ve indicated we championed for quite some time,” Mr Husic told Sky News.

“In reference to Joe Hockey’s contribution, it was made on that night and then they quickly, the Coalition, retreated from making a decision on it and we had to campaign as a Labor opposition for some time to see this change, and we welcome the government’s support of making this happen, so if it happens today, which is anticipated that will occur, that’s a great thing.

“It should have happened long ago.”

‘Grey area’

Liberal backbencher Craig Kelly said there was always a ‘grey area’ in deciding what deserved exemption from the GST.

“When we had the GST we had the initial proposal that it should be across the board,” Mr Kelly told Sky News.

“This goes back to when John Howard put that up before the 1998 election.

“The Democrats came in and exemptions were carved out.

“There will always be, when you carve exemptions out there will always be a grey area about where it should be.

“We talked about the example of the barbecue chicken versus the uncooked chicken, the sandwich versus the bread. The sandwich has the tax on, a loaf of bread doesn’t.

“Where you draw that line here will always be some grey areas, and there’s always a chance of pushing that line a little bit further.

“The tampon tax, as its so called, look fair enough, they’re going to move that line a little bit further, but you are right, it does open up arguments to push the line a little bit further.”

Asked whether anything else should be exempted from the GST, Mr Kelly said it should be as broadbased as possible.

“Therefore I wouldn’t like to see that line moved any further,” he said.

“Let’s make an exemption for the tampon tax, but I think let’s cut it there and no more.”