Premiers divided as tax high on agenda

Abbott quiet on GST rise

PRIME Minister Tony Abbott has hosed down expectations his leaders’ retreat will settle on changes to the GST.

“We are at the beginning of the process,” Mr Abbott said yesterday.

He, the premiers and chief ministers will take part in a retreat in Sydney today which seeks to thrash out a future framework for the federation.

The GST is high on the agenda after NSW Premier Mike Baird proposed an increase in the rate to 15 per cent from 10 per cent as a way of funding a projected shortfall in health funding.

Mr Abbott has declined to say whether he agrees with his Liberal colleague or if the Commonwealth would finance any compensation for households.

Tax Institute president Stephen Healey believes the Government should, at a minimum, undertake a comprehensive review of the exemptions and special rules in GST law to ensure they are still “necessary and appropriate”.

Opposition Leader Bill Shorten, who will not be at the retreat, continues to oppose a rise in the GST, arguing it’s a lazy approach to the problems created by the Abbott Government when it cut health and education funding to the states.

But two other Labor leaders, South Australian Premier Jay Weatherill and ACT Chief Minister Andrew Barr, have welcomed the consideration of Mr Baird’s proposal, while stopping short of offering wholehearted support.

“We can’t enter these discussions by just ruling things out,” Mr Weatherill said.

Mr Barr said the Federal Government had failed to contribute constructively to the taxation reform debate.

“Just because it’s difficult doesn’t mean that we shouldn’t try,” he said.

Like Victorian Premier Daniel Andrews, Mr Barr is keen on an increase in the Medicare levy to secure more money for health.

Mr Andrews believes it is a fairer alternative to raising the GST.

While he accepts the average family might be angry about paying more in tax, he said the anger should be directed at Mr Abbott after he hacked into hospital funding “like no other Prime Minister”.

Queensland Treasurer Curtis Pitt also said there would need to be a “compelling argument” to change his view of opposing a rise in the GST.

West Australian Premier Colin Barnett has backed a GST overhaul, including increasing the rate to 12.5 per cent and extending it to online goods and services and fresh food.