GST INCREASE EDGES CLOSER
COAG to commission research into sales tax hike
STATE and Federal Governments rake in about $ 420 billion a year in taxes between them, but they are now one step closer to boosting their hit on the nation’s hip pocket.
A hike to the GST is becoming more likely, with Prime Minister Tony Abbott and state leaders set to commission detailed modelling about the impost.
But the Federal Government is likely to reject a push by Premier Annastacia Palaszczuk to double the Medicare levy to 4 per cent.
The changes could be agreed as soon as the end of this year, with treasurers set to discuss the plans next month before further talks between leaders.
Some federal ministers are opposed to increasing the Medicare levy and only want an increase to the GST if there are other tax cuts to compensate families.
But Queensland and other states are pushing back against the compensation plan because they fear this will not leave enough to pay for growing health and education costs.
A leaders’ summit in Sydney broke up last night without an agreement on new taxes, but increases to the GST and Medicare levy have firmed as the two preferred options.
In yesterday’s closed meeting, Mr Abbott is believed to have argued in favour of NSW Premier Mike Baird’s proposal to lift the GST rate to 15 per cent.
Any taxation reforms on this scale need to go to an election ANNASTACIA PALASZCZUK
But Mr Abbott has not committed to this position and insisted he wanted all options discussed.
“It’s clear we must be brave, ambitious and openminded if we’re to achieve the reforms Australia needs,” Mr Abbott said.
“It’s increasingly clear that we must work together – any meaningful reform will require both courage and co- operation.”
One of the leaders is believed to have discussed options of broadening the GST but most of those who want the tax changed support an increase in the rate.
Ms Palaszczuk and Victorian counterpart Daniel Andrews both opposed changes to the GST but argued in favour of hikes to the Medicare levy.
Ms Palaszczuk revealed she wanted the Medicare levy to increase in stages and eventually double to 4 per cent, while Mr Andrews called for a maximum of 3 per cent.
The Queensland plan would see someone earning $ 100,000 pay an extra $ 2000 a year in the Medicare levy.
But the Premier denied she was breaking an election promise of no increases to taxes, as the Medicare levy is a federal impost.
She said the options to increase the Medicare levy were “just proposals” and she would not support any tax hike unless it had been endorsed by voters.
“Any taxation reforms on this scale need to go to an election,” Ms Palaszczuk said.
Increased funding for education and health are likely to be debated further at a formal Council of Australian Governments ( COAG) meeting today.
The COAG meeting will also sign off on a new terrorism alert system and discuss national plans to tackle domestic violence and ice.
HEAVYWEIGHTS: Local Government Representative Troy Pickard, NT Chief Minister Adam Giles, Queensland Premier Annastacia Palaszczuk, WA Premier Colin Barnett, SA Premier Jay Weatherill, Prime Minister Tony Abbott, NSW Premier Mike Baird, Victorian Premier Daniel Andrews, Tasmanian Premier Will Hodgman and ACT Chief Minister Andrew Barr pose for photos ahead of the Leaders’ Retreat at Victoria Barracks in Sydney yesterday.