COMPETITIVE DISADVANTAGE
It noted that the health sector, for example, "has
significant government involvement through direct
subsidy and regulation" with many charges provided
either free or with a co-payment a "fraction of the
total cost of providing the service".
Therefore, applying the GST to healthcare "would
place the private health sector, with its heavier
reliance on direct fees, at a competitive disadvantage
with the public health system". The same argument was
used to exclude education.
Mr Morrison said on Monday that health and
education we excluded for "very practical reasons" and
"those practical issues remain as challenging as they
were back then".
As The Australian Financial Review reported last month,
the federal Treasury has worked up GST options that were
presented to state treasures at their October 16 meeting
with Mr Morrison. These include a 15 per cent rate on
the current base, a 12.5 per cent rate on the current
base, and the two rates on expanded bases.
Mr Morrison and Prime Minister Malcolm Turnbull are
insisting that any GST increase would be offset by tax
cuts elsewhere to ensure there would be no overall
increase in the tax take.
Mr Morrison said returning bracket creep was a priority,
while Mr Turnbull reassured voters there would be
adequate compensation to make sure those on welfare and
the low paid were no worse off in net terms.
"Any changes to the tax system have got to be ones that
ensure that there is no disadvantage to the most
vulnerable Australians, to less well-off Australians,"
he said.
FAIRNESS SOUGHT
"We have to make absolutely clear that any changes to
the tax system or transfer payment system are ones that
are fair, that are seen to be fair across the board."
This indicates pension and other welfare top-ups along
with compensatory tax cuts.
However, the two states most amenable to an increased
GST, South Australia and NSW, reminded the government
that filling funding gaps in health and education were
the original priorities for increasing the tax. SA Labor
Premier Jay Weatherill pointed to the $80 billion
funding cut to the states for health and education in
the 2014 federal budget with the suggestion the states
think of alternative funding proposals.
This was seen as a push to garner support for an
increased GST and Mr Weatherill reiterated on Monday
that he was not going to stick his neck out just so the
revenue could instead be used to fund election-year tax
cuts for the federal government.
"You can't rip $80 billion from our budgets and then beg
some sort of tax measure to fix up the problem," he
said.
However, Mr Weatherill said both tax cuts and extra
funding for health and education could be provided if
the government looked at broadening the rate and base of
the GST, as well as looking at other measures, including
superannuation tax concessions.
"That gives you a broader canvass on which to work," he
said.
As well as super, the Premier urged a firmer hand
against multinational tax evaders, and placing the GST
on financial services, the latter of which would raise
up to $4 billion a year.
Mr Turnbull said on Monday that his preference was for
an election in September or October, which means could
be the centrepiece of the May budget.
Mr Weatherill
chipped his federal Labor counterparts, saying he had
yet to see from them a proposition that would fill the
funding gaps facing the states.
NSW Liberal Treasurer Gladys Berejiklian repeated her
support for a 15 per cent GST on the current base,
arguing this would provide enough to compensate those on
$100,000 and less and address the funding shortfalls.
"Our first priority remains addressing the looming
fiscal gap faced by all states and the commonwealth over
the next 20 years as a result of our growing health
funding needs," she said.
The government has not released the revenue estimates
from the GST scenarios Mr Morrison presented to the
states. KPMG has done some modelling which finds, for
example, that the current 10 per cent GST extended to
fresh food, health and education would raise an
additional $12.1 billion this financial year.
A 15 per cent GST based on current exemptions would
raise an additional $26.0 billion this financial year.
This would be enough to abolish insurance taxes, stamp
duty on motor vehicles and 80 per cent of conveyancing
stamp duty.
"Any remaining additional GST revenue is returned to
households through personal income tax cuts and welfare
payments," KPMG says.
Federal Nationals MP David Gillespie costed a New
Zealand-style model that would extend a 15 per cent GST
to health, education, fresh food and other exempt areas.
This would generate an extra $65.6 billion in 2017-18.
Mr Morrison thanked Mr Gillespie for his efforts but
said it was at "the pretty extreme end of the options
that you can technically consider".
Source:::
The Australian
Financial Review, dated 02/11/2015.........