The first four options
include lifting the GST to 15 per cent, raising $32.5
billion; lifting the GST to 12.5 per cent and expanding
the base to include all food and non-alcoholic drinks,
raising $25 billion; and raising the Medicare Levy from
2 per cent to 4 per cent in one hit, which would raise
$15 billion. The fourth, and most radical option would
be to raise the GST to 15 per cent, expanding it to
include food and non-alcoholic drinks, water and
sewerage. This would raise $45 billion annually.
The second set of four
other options being considered are expanding the GST
base to include health services; including education
services; introducing a GST-equivalent financial sector
tax; and raising the Medicare Levy to 4 per cent over
eight years.
In 2014, it was estimated
that extending the GST to health, education services and
introducing a financial sector tax would each raise
about $4 billion annually if implemented.
The Turnbull government
has already indicated, however, that health and
education are likely to be exempt from any GST changes,
whereas fresh food and financial services are considered
fair game.
The paper also hints at
the difficult public debate that will accompany any rise
to the consumption tax, warning "public commitments
about which households will be fully compensated should
be avoided" because "making commitments now risks
over-compensation for households".
Offsetting GST price rises
for households earning less than $100,000, and half of
the price rises for households earning less than
$155,000, would use "at least" half the extra GST
revenue, it states.
The $15 billion that would
be raised by increasing the Medicare Levy, without
assistance for households, is about the same amount left
over if the GST is increased to 15 per cent and
households are compensated.
That means, in effect,
some people would be worse off under a Medicare Levy
rise than a straight increase in the GST.
The increases in pensions,
family payments, concessions for seniors and a rise in
the low income tax offset were used to compensate
households after the introduction of the carbon tax in
2010-11 and served as a "useful example of the form that
compensation could take for a change in the GST".
Treasurer Scott Morrison
and his state counterparts will meet on Thursday in
Sydney, the day before the leaders meeting, with reforms
to state taxes to dominate discussions.
Last week, Mr Morrison
played down the significance of the Treasury modelling,
which has not been released, arguing it had been "done
based on the request from the states".
Mr Morrison said on Monday
the "idea that we should be raising taxes to pay for
higher levels of expenditure" by the states did not
appeal to him, or the Prime Minister.
Mr Shorten said on
Tuesday: "I don't believe that the case has been made
that Australia, in order to make sure that we are a
successful, fair country needs to have a GST where you
put everything up to 15 per cent".
Mr Costello wrote for News
Corp that "if the Coalition goes ahead with that
proposal [a rise to 15 per cent], you can put down the
glasses and stop worrying about other policies ... it
will swamp everything".
Mr Shorten said he didn't
always agree with Mr Costello "but he is stating the
obvious, isn't he? Putting up a GST to 15 per cent, it's
lazy".
NSW and South Australia
have led the case, among the states, in pushing for a
GST rise.
Source::
The Sydney Morning Herald, dated 08/12/2015.