Commission backs GST change in WA
The nation’s biggest businesses have thrown their support behind an overhaul of the GST, saying the system is holding back the national economy and hurting States such as WA.
The Business Council of Australia has backed key proposals from the WA business community, the State Government and the Opposition to change the GST, but has gone further with ideas it argues will deliver major benefits to the economy.
Council chief executive Jennifer Westacott said that for too long, governments had used the difficulty of changing the GST allocation as an excuse to put off much-needed changes.
“There is now an urgent need to change the hugely complex GST distribution formula,” she told The West Australian.
“It’s not fit for a more dynamic economy, it’s not providing the incentive for State-based reform and it’s become a real obstacle to broader tax reform.”
In its submission to the Productivity Commission’s inquiry into the GST, the BCA broke from many organisations by backing a change that would enable the Commonwealth Grants Commission to take into account the economic conditions facing a State or Territory.
Currently, the commission focuses solely on revenue flows and the costs of services of a government, with the strength of the local economy ignored.
The BCA believes the treasurer of the day should direct the commission to look at a State’s ability to manage “economic shocks”, in a move that would have helped WA over the past three years.
It supports ending the practice of money being shifted between the States because of the plight of indigenous communities.
This year, more than $1.7 billion will be shifted, of which more than one-third will go to the Northern Territory and $187 million to WA.