The Federal Government’s review into GST has recommended broadening the tax base to boost federal tax revenues, but Treasurer Wayne Swan says such a move would hurt battlers.
The GST review comes as Deloitte Access Economics forecasts the government’s taxation revenue will already fall short of Treasury estimates and push the budget into deficit this year.
The review details a set of proposals on how to help boost falling tax revenues by broadening the tax base, including a recommendation to expand the GST net to catch $4.2 billion in online sales.
Former NSW premier Nick Greiner, who led the review, believes the GST needs to be thoroughly examined.
“You certainly need to have the debate,” Greiner said at the weekend.
“The notion that you say to the public ‘This is off the table, it’s off the agenda’… is plain stupid.”
According to Greiner, the GST is not delivering revenue the way it was intended to, which is why changes need to be made.
“In the early years at the turn of the millennium it actually met or exceeded its expectations, which were quite clearly and unequivocally to give the states a growth tax,” he said.
“In other words, a tax that grew with or ahead of the economy because the states ultimately have responsibility, especially for health and also for education.”
“And the spending levels in those things are growing much, much faster than the CPI.”
“So initially the GST did what it was meant to do. Then the GFC and the rate of growth dropped roughly by half, and there is no serious prospect that it’s getting back to rates of growth which it previously achieved.”
But Swan told ABC Radio he doesn’t agree with Greiner about lifting or broadening the base of the GST.
“We believe that the GST, by lifting it and broadening the base will hit people, particularly battlers, really hard and that’s not a priority of this government,” Swan said.
Swan also offered a vague response when asked whether the government is looking to lower the threshold for goods bought online from overseas.
“I only received that report in my office on Friday,” he said.
“I will take time to consider that report and I’ll publish it in due course, and of course I’ll have a discussion with the state treasurers about that when we meet later in the year.”