Australia to Review Goods and Services Tax before Possible Hike

Australia to Review Goods and Services Tax before Possible Hike

State governments want to see a review of how the goods and services tax is (GST) distributed before a possible implementation of a tax hike as suggested by Prime Minister Tony Abbott.

The PM said he wanted to have a “mature debate” about revenue-raising measures available during a parliament session and there is speculation he is laying the groundwork for a tax hike from the GST which is a Value Added Tax on most goods and services which is refunded to all of those in the chain of production except the consumer.bigstock-Melbourne-skyline-39536569

Any changes to the GST would require approval from the state governments and some states have made it clear that they will vote down any raise if they do not see a larger proportion of the revenue as is the case with West Australian Premier Colin Barnett who has said:

“We’ve made it very clear for a long time [that] we will only agree to an increase in the rate or broadening of the application of the GST, if the main issue – and that is the sharing-up of the GST – is corrected,”

Before the last election in 2013, Mr Abbot said he was opposed to raising the GST and would not pursue it and the Australian Council of Social Services (Acoss) has warned that any rise in GST will hit the poor hardest with a suggestion that people would lose faith in the tax system should a rise happen and the suggestion of tax reform is centred around the GST. Acoss Chief Executive Officer Cassandra Goldie commented:

“What about superannuation and negative gearing [on property investments], what about land tax and payroll taxes?”

However, Mr Abbot told Parliament:

“I want to assure members opposite that we will certainly keep our commitments. But on the subject of the GST, as is well-known, any change to the GST is a matter for the states.”

Many businesses are against a possible tax hike as they fear it may affect consumer spending although it would raise much needed funds to tackle Australia’s current deficit. With the trade deficit also doubling it is of great importance to the country that the necessary funds are raised somehow. Australia’s trade deficit more than doubled to A$2.26bn (£1.2b; $1.96bn) in September, data showed.

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