Ab­bott sees tax rise as an­swer to fund­ing hole PM backs GST hike


PRIME Min­is­ter Tony Ab­bott has backed an in­crease to the GST as his pre­ferred way to plug the na­tion’s loom­ing health fund­ing cri­sis – while shop­pers are ex­pected to be whacked with a new $ 550 mil­lion levy for online pur­chases.

In his strong­est com­ments on the sub­ject to date, Mr Ab­bott said in­creas­ing the GST was his first choice to at­tack the mas­sive deficit in health and ed­u­ca­tion spend­ing that is forecast to bal­loon to $ 45 bil­lion by 2030.

La­bor lead­ers, in­clud­ing Vic­to­rian Premier Daniel An­drews took an al­ter­na­tive pro­posal to in­crease the Medi­care levy into yesterday’s COAG meet­ing of state and ter­ri­tory lead­ers.

A one per­cent­age point in­crease in the levy would raise an ex­tra $ 7.5 bil­lion a year. “We have put things on the ta­ble for con­sid­er­a­tion and all of us have pref­er­ences,” Mr Ab­bott said, while stress­ing it was still early in the re­form process. “My pref­er­ence would cer­tainly be for con­sid­er­a­tion of GST is­sues rather than con­sid­er­a­tion of a sim­ple in­crease in the Medi­care levy be­cause just in­creas­ing taxes is hard to see as re­form.”

The Prime Min­is­ter did not rule out tak­ing a GST in­crease to the next elec­tion. But that re­mains a pos­si­bil­ity – with a na­tional re­port on the is­sue ex­pected within weeks, fol­lowed by a white pa­per set­ting out a list of firm op­tions next year.

“We’ve abol­ished the car­bon tax, we’ve abol­ished the min­ing tax, we’ve re­duced com­pany tax for small busi­nesses … my com­mit­ment is to try to en­sure that taxes are lower, sim­pler and fairer,” Mr Ab­bott added.

Premier Mike Baird has claimed in­creas­ing the GST from ten to 15 per cent would raise an ex­tra $ 30 bil­lion a year in 2015 dol­lar terms.

Half the new rev­enue would com- pen­sate lower in­come house­holds with small in­come tax cuts and small in­creases to wel­fare pay­ments.

Mr Ab­bott prefers in­creas­ing the GST be­cause he said the tax is a “joint ex­er­cise” be­tween the Com­mon­wealth and states, whereas the Medi­care levy was “sim­ply a Com­mon­wealth tax”. The Fed­eral Gov­ern­ment can­not act on GST un­less there is unan­i­mous sup­port from the states and ter­ri­to­ries. And that re­mains the stum­bling block, with Queens­land Premier An­nasta­cia Palaszczuk re­it­er­at­ing her op­po­si­tion to in­creas­ing the GST yesterday. Mr An­drews is also op­posed.

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