An element of bipartisanship has entered the Australian tax debate, with Liberal Premier Mike Baird of NSW and ALP Premier Jay Weatherill of South Australia both calling for an increase of the GST tax rate to 15%.
The calls come before the Wednesday meeting between Treasurer Joe Hockey and the states and territories over tax reform. Prime Minister Tony Abbott has congratulated the two premiers for raising the issue.
I’m pleased that Premier Mike Baird, along with Premier Jay Wetherill, are prepared to have a constructive, responsible discussion. We can’t assume that if there is a revenue problem, it’s wholly and solely the Commonwealth’s job to fix.
“This is something that obviously is going to be very thoroughly discussed, starting on Wednesday at the leaders’ retreat, and then we’ve got a long white paper process – both the federation reform white paper process and the tax reform white paper process.”
Mr Baird’s proposal came in a bylined opinion piece in Monday’s The Australian. “The GST has not been touched since it was implemented 15 years ago. It is a highly efficient tax that is difficult to avoid. And while it is a regressive tax, we can take measures, through the income tax and welfare system, to ensure that any changes do not make life harder for struggling families and the ¬vulnerable.
“I am therefore proposing to my state and federal colleagues that we unanimously support the raising of the GST to 15 per cent, with no broadening of the base — fresh food, health, education and childcare will continue to be excluded.
“Our expectation is that a package can be designed with compensation to ensure households earning up to $100,000 are not disadvantaged. Importantly, all funds raised would be directed to healthcare, compensation or tax cuts. This ensures our health services will be fully funded.”
Mr Weatherill told ABC radio in Adelaide that he supported Mr Baird’s call. “The massive cut to health funding has to be filled in some way,” he said. “We have to have the discussion.
“There’s no doubt there is a gap between what we have and what we need to fund basic services in health care. I’m not here to shut down any conversation about it.”
The comments by Mr Baird and Mr Weatherill come after Mr Hockey said it was up to the states, who receive the money from the tax, to press for an increase in the GST (leading The Sydney Morning Herald to opine that this was like asking the children to agitate for more vegetables in their diet).
Given the divisiveness and immaturity of political debate in Australia it would not be surprising if the debate descended into the petty backbiting we are used to. But given that both Coalition and Labor premiers have made the call, there would seem to be a glimmer of hope that Wednesday’s meeting will be a start to the process of doing something about Australia’s taxation system, which virtually everybody agrees is in serious need of reform.
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