Elections behind GST windfall

EVERY Australian state will receive a GST windfall – bankrolled by Commonwealth coffers – under a major shake-up that will not leave any state worse off.

Queensland is expected to be handed about $90 million more under a transition scheme that aims to neutralise a “winner and loser debate” ahead of state and federal elections.

Treasurer Scott Morrison will this week unveil the biggest overhaul of the way billions of dollars raised from the GST are divided between states since the system began 17 years ago.

News Corp understands Cabinet agreed to the plan – which dramatically changes the methodology of GST allocation – because no state would be worse off while transitioning to the new system.

It means the states will be given more money to pay for key services such as education and health care.

The current complex formula of distributing the GST tries to level the playing field by ensuring states and territories can provide the same standard of services, given that some states don’t have the ability to raise as much tax or revenue.

To “equalise”, states and territories are brought up to the fiscally strongest state, however this will now move to the average, to ensure a more “equitable” model.

While about $6.5 billion will be added to the GST pie over the next four years through changes to low-value online internet purchases, by applying GST to digital services, and cracking down on GST on property transactions, Mr Morrison will top it up with cash from government coffers.

This will ensure WA, which is angry over its dwindling GST allocation, will get a boost, but not at the expense of smaller states or key election battleground states.