Tony Abbott hints at GST hike

Prime Minister Tony Abbott has stated that the GST is a more streamlined way of collecting revenue than income tax.

Speaking on radio station 2GB on Thursday morning, Mr Abbott acknowledged the “efficiency argument” for raising the GST is a “powerful point”.

“There is an efficiency argument for taxing earnings less and taxing spending more,” Mr Abbott said.

“I accept there is a strong argument, but it’s got to be in the context of overall lower taxes.

“It’s a very powerful point … this is something that we’re looking at as part of the tax reform white paper and we’ll have more to say about this in the months ahead.”

The comments come amid growing calls for a GST overhaul.

 Experts claimed it will not deliver enough to state government coffers in the long-term.

Mr Abbott’s government has promised any major reforms to the system would be taken to an election, but only if there is a consensus among the states and territories.

Federal Labor has vowed to fight any changes to the GST. Opposition leader Bill Shorten said there were better ways to improve the government’s bottom line.

“Is that the full extent of Mr Abbott and the Liberal Party of Australia’s creativity for the future of Australia?” he said.

“That their plan is to increase the GST to 15 per cent and put it onto school fees and healthcare costs and fresh food? “Mr Abbott and his Liberal team have just run out of ideas. It’s official.”

The states are still split on the issue though, with the strongest advocacy for a GST hike coming from New South Wales and South Australia. “The NSW government recommends increasing the GST to 15 per cent but also ensuring there is a compensation package for households earning up to $100,00,”

NSW Treasurer Gladys Berejikilian told a budget estimates hearing on Thursday.

“In addition to that there is still room for income tax cuts.”