Banks and other financial institutions were exempted
from the goods and services tax when it was introduced
because of the difficulty of defining the service to be
taxed.
Mr Weatherill is proposing a separate tax that would
apply only to margins. He said work published by the
National Centre for Social and Economic Modelling showed
it would target higher rather than lower earning
households.
The South Australian treasury believed the tax would raise
$3 billion to 4.5 billion per year. It would operate
nationally, to prevent tax competition between the states.
All of the money raised would flow to the states.
"I know the first instinct of banks might be to rule out
such a thing," he said. "And it's true that some of it will
fall on bank profits. But before you shed a tear for the
banks, let me remind you that the Commonwealth Bank
announced a full-year net [profit of] $9 billion for 2014-15
and in May the other members of the big four each announced
half-yearly profits in the vicinity of $3.5 billion."
Mr Weatherill said the $3 billion to 4.5 billion raised
would only go some way to meeting a gap in funding for
health services of $35 billion per year by 2030 identified
by his NSW colleague Mike Baird.
"You might be concerned about the equity effects of
extending the GST, but what about the equity of not properly
funding state health systems and making them user-pays," he
said.
The chief executive of the Australian Council of Social
Service Cassandra Goldie said while she didn't rule out
extending the GST with compensation for low income earners,
it was "the last grand bargain we should accept".
"We had compensation when the GST was first put in," she
said. "But since then both Labor and the current government
have made major changes to the social security rules that
have cut income supports. We are very worried about the idea
that you can push up the GST and compensate people and solve
the problem.
"Before we go looking at the GST as a source of revenue, we
we should look at other changes such as broadening the base
of the income tax, and cutting superannuation tax breaks.
Those changes could not only raise revenue. they would help
the economy."
Former NSW treasurer Michael Egan told the summit the idea
that the GST could be raised to cut the rate of company tax
was "complete ninkinpoopary".
"There's not a politician anywhere in the world that would
dare put that proposition to the electorate because they
would just get killed. So the business community should just
forget it," he said.
"The other thing people have got to realise, and the
business community in particular, is that tax reform can't
just be about reducing the burden of taxation. We huge
budget deficit and we need to fund the services that people
demand. Any changes to the tax system have to take into
account that the overall tax burden has to increase."
Source::
The Sydney Morning Herald, dated 23/09/2015.