Australia Should Target Revenue-Neutral Tax Reform: Hockey

"I'm not up for an increase in federal taxes to increase expenditure by the states," Australian Treasurer Joe Hockey has said.

Hockey was asked during an interview with Sky News if he supported New South Wales Premier Mike Baird's call for a 15 percent goods and services tax (GST) to pay for health services. He said he had been contacted by federal Prime Minister Tony Abbott and a number of state premiers following their recent leaders' summit and had been assured that "there were very productive discussions about tax reform."

However, Hockey stressed that "simply increasing taxes is not tax reform." He said: "You actually have to have a fairer, simpler, and lower tax system. The Prime Minister is adamant about that, I am adamant about that. The federal Government is not going to go down the path of simply increasing taxes to give more money to the states to spend more."

Hockey is due to meet with his state counterparts on August 14. Last month, the federal and state leaders agreed in principle to broaden the GST to cover overseas online transactions under AUD1,000 (USD742) and refer the matter to the Treasurers' meeting.

 "We're aiming to get it down to zero so that there is the very same GST system applying to goods purchased overseas as would be purchased in Australia. I think that's a pretty reasonable threshold test. Obviously, to get companies supplying goods to Australia to charge the GST in the same way they might charge consumption taxes in Europe or Japan or so on is going to be difficult. We will discuss the process with the state Treasurers next Friday, but I'm confident that we can ensure that businesses operating in Australia are competing on a level playing field with people providing goods from overseas," he said.