The new Coalition Government has today ruled out making any changes to the GST, contravening the wishes of the Western Australian and ACT leaders who have called for an increase in the tax. From the AFR:
“There will be no change to the GST, full stop, end of story,” a spokesman for Mr Abbott said.
His swift response comes after West Australian Liberal Premier Colin Barnett called for a lift in the rate at which goods and services are taxed. ACT Labor chief minister Katy Gallagher backed the call…
“Unfortunately one of the tough jobs Tony Abbott is going to have is to step up to the plate and take some leadership on the federation and front and centre of that will be the GST issue,” Mr Barnett said.
“I’m sure he doesn’t want to do that, but I don’t think he has much choice.”
This is disappointing news, and highlights the difficulty in achieving any kind of tax reform in this country.
Given its strong majority, I had at least hoped that the Coalition would defer any decision on the GST until after it had conducted its planned tax review.
Like it or not, the GST is a better form of tax than many others in the federal-state system (e.g. stamp duties), and its increase (or base widening) in place of more distorting taxes could have provided the economy with a nice productivity kick.
The blanket decision not to change the GST also casts an even darker cloud over the prospect of reforms to negative gearing, or the introduction of a broad-based land tax.
