The analysis shows if the GST was extended to
healthcare and fresh food it would raise an extra
$145 billion over 10 years. But the estimated
revenue shortfall from the tax cuts would be $165
billion in 10 years.
Mr Hockey on Wednesday rejected reports that he had
suggested applying the GST to healthcare, telling
journalists "I never said that."
"What that does is it illustrates how hard it is to
get a proper discussion about taxation reform
underway," he said.
"I never said the GST should be applied to health."
But on Monday Mr Hockey said the GST was only
applied in a "narrow" way to Australia's goods,
particularly to the healthcare sector, "which is
essentially GST free".
"And because health is growing with the ageing
population, it means that the tax base for the GST
is narrow," he said.
His comments were interpreted as a sign the
government may be preparing the ground for GST
changes - extending the GST to healthcare - that it
could take to the next election.
Parliamentary Library figures show the only way the
Abbott government could fund its tax cuts with the
GST would be to extend it to healthcare, fresh food
and education, raising $198 billion in 10 years.
Extending the GST to those three areas would be
politically risky, further increasing the likelihood
Mr Hockey will instead seek to cut government
spending to help pay for the tax cuts.
Greens Treasury spokesman Adam Bandt has criticised
the tax cut proposal, saying Mr Hockey is proposing
a shift of the taxation burden onto low-income
households.
"The Treasurer would need to extend the GST to
health, education and food to cover the cost of his
income tax cuts," Mr Bandt said.
"The Treasurer is planning a tax shift, not a tax
cut. He's ruled out balancing the books by reforming
unfair tax breaks for the wealthy, but he's kept
alive a broader GST."
Mr Hockey says the Abbott government has "[no] other
choice" but to cut taxes for middle and low-income
households, because without personal income tax cuts
about 300,000 Australians will move into the second
highest tax bracket in the next two years because of
inflation and rising wages - referred to as "bracket
creep".
Source:
The Sydney Morning Herald, dated 26/08/2015. |