Fast Lane: Is GST reform still on the table?
Monday, February 8, 2016/
Has the federal government made a call about reform to the goods and services tax?
Until recently – last week even – it appeared the government was still considering either changing the GST base or rate as one of a number of options in its broader tax reform agenda.
But that changed on Sunday when Prime Minister Malcolm Turnbull told the ABC he is not yet convinced that increasing the GST will lead to stronger economic growth.
“The issues with any changes to the tax system, particularly a really big one like increasing the GST, is that you have to be satisfied that it is actually going to deliver an improvement in GDP [gross domestic product] growth,” Turnbull said, according to The Guardian.
“In other words, it’s got to drive jobs and growth.
“Unless you can be satisfied that it’s going to do that, and that it’s going to be fair, of course, which is equally important, then you wouldn’t do it.”
The Prime Minister said he “remain[s] to be convinced or be persuaded that a tax mix switch of that kind would actually give us the economic benefit that you’d want in order to do such a big thing”.
And Turnbull said changing the GST could only be done if voters were consulted first.
“If we did not take a GST change to this election then we could not try to implement that in the next term,” he said.
It’s not clear if a final decision has been made, with foreign affairs minister Julie Bishop saying on the weekend the government will make an announcement about potential tax reform “when we have a model ready”.
However, the business community needs to find out sooner rather than later if the base or rate of the GST is to change.
Craig Whatman, tax partner at Pitcher Partners, previously told SmartCompanysmall businesses will need “sufficient time” to prepare for a new GST rate.
“My view would be you would ideally need 12 months’ notice to do all the things an SME needs to do to prepare for an increase in the GST rate, if it’s going to happen,” Whatman says.
Australian voters need to know what options are definitely on the tax reform table.
And SMEs need to know what’s in store for their businesses.
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