GENIUS, OR IS IT A BAIRD IDEA
PRIME Minister Tony Abbott has welcomed a proposal to increase the GST to 15 per cent, with half the proceeds ploughed back into larger welfare payments and income tax cuts for lower income households.
But any change to the GST appears doomed, with Victoria resisting an increase and Western Australia Treasurer Mike Nahan saying he was “not interested”.
Queensland has also refused to negotiate on GST.
An extra $ 30 billion a year would be raised from increasing the GST under a proposal tabled by NSW Premier Mike Baird ahead of this week’s special COAG meeting and leaders’ retreat on tax reform.
Provisional modelling shows that $ 15 billion of the new revenue could be used to compensate lowerincome families, including small increases in welfare payments to help meet the higher cost of living.
The cash could also be used to fund income tax cuts, potentially of around 1 per cent, for households earning less than $ 100,000 and smaller cuts for households earning $ 150,000 or less.
The other half of the extra GST revenue would be used to help bolster state and territory spending.
NSW estimates that there will be an annual $ 45 billion shortfall in state budgets by 2030.
Mr Abbott described Mr Baird’s proposal as “very sensible, strong and structured” yesterday, joining South Australian Premier Jay Weatherill and key business leaders in welcoming the plans.
“I think it was a very constructive proposal,” Mr Abbott said.
The Federal Government says any GST increase must have unanimous support from the states – and that remains the biggest hurdle, with Labor leaders in Victoria, Queensland and the Federal Parliament lining up against the plans.
Opposition Leader Bill Shorten accused the Abbott Government of forcing an increase to the GST after axing $ 80 million in state education and health funding.
“The real problem with a Liberal GST … is that it’s going to increase the cost of living pressures on Australian families,” he said.
Premier Annastacia Palaszczuk vowed to scuttle the NSW push and is also demanding the Federal Government cough up more for infrastructure funding in Queensland.
Ms Palaszczuk has written to Mr Abbott calling for access to the $ 5 billion federal infrastructure fund.
The move would give Queensland an exemption on rules every other state has to abide by and is likely to be rejected.
Ms Palaszczuk said the infrastructure fund should be carved up according to population, which would give Queensland about $ 1 billion.
“With 72¢ of every tax dollar collected in Queensland going to Canberra, why should we go wanting?” she wrote.
CONTENTIOUS IDEA: NSW Premier Mike Baird has proposed increasing the GST to 15 per cent.