Calls for GST reform have been boosted by a former premier and a Liberal senator, but Tony Abbott says it’s a matter for the states.
A veteran Liberal senator and a former Victorian Labor premier are fanning the debate about the GST, with both saying the consumption tax needs to be adjusted to help fund state hospitals and schools.
Queensland senator Ian Macdonald is calling for GST exemptions for fresh food to be scrapped, putting him at odds with Prime Minister Tony Abbott.
And John Brumby is urging state and territory leaders to make a “courageous” push for reform of the GST, describing any increase as inevitable.
Debate over the goods and service tax has been triggered by federal budget plans to cut $80 billion from health and education funding over the next decade.
The Abbott government has been accused of goading premiers and chief ministers into lobbying for a change to the GST.
Mr Brumby, who chairs the soon-to-be-abolished COAG Reform Council, says GST reform is the states’ best option.
“The real debate is about the nature of the increase,” the former Labor premier said in a speech in Melbourne on Monday night.
“Is it base? Is it rate? Is it both?”
Mr Brumby admitted that lobbying for a GST hike would be a “courageous” and “difficult” decision for premiers to make.
“If I was a state premier I think I’d be putting up my hand to say ‘I’ll have the GST, thank you very much’,” he said.
Mr Brumby’s comments came as federal Liberals began arguing for a change in the GST, despite Mr Abbott ruling out any hike in this term of government.
Senator Macdonald said while he supported broadening the GST base, he would never back any increase in the tax.
“I was around when that was introduced and I was one of those who signed my name in blood that we wouldn’t increase the rate beyond 10 per cent,” he told ABC radio.
He said the coalition should return to the Howard government’s original GST model, which did not include exemptions for fresh food, and health and education expenses.
ACT Chief Minister Katy Gallagher said the GST had to be examined as part of the government’s taxation review.
“And if you are having a look at the GST you have to be mindful of the impacts on particularly lower income people,” she told ABC radio.
But the prime minister refused to speculate on whether he would increase the GST if asked by the states.
“You’re asking me a hypothetical question,” he told Fairfax Radio.
“What I want is taxes that are lower, simpler and fairer. What the states do is their business.”
Mr Abbott pointed to the proposed white paper on federation, saying he wanted states to be “more sovereign in their own spheres”.
“My opinion is that we pay more than enough tax already and we have got to over time get taxes down,” he said.
Queensland Treasurer Tim Nicholls said the government was opposed to both a hike in the GST and any push to have it applied to fresh food.
“No, we are not seeking a change in the GST, we’ve made that abundantly clear,” Mr Nicholls told parliament.
Labor leader Bill Shorten said Senator Macdonald had “let the cat out of the bag” on the coalition’s plans to increase the GST.
“He’s just telling Australians what the Abbott government really want,” Mr Shorten told reporters in Brisbane.
He said Labor would not support any hike in the consumption tax.
“Be very worried when the Abbott government says they don’t want to increase the GST,” Mr Shorten said.
“We all know that Tony Abbott says one thing before an election and he does something (else) afterwards.”