On Wednesday and Thursday this week, the Leaders Retreat was held in Sydney involving the State Premiers and the Prime Minister. One of the ‘hot button' issues on the agenda was the GST – including NSW Premier Mike Baird's proposal that the GST rate be lifted from 10% to 15% to fund the cost of public health. An alternate proposal was put forward by Queensland Premier Annastacia Palaszczukto instead to raise the Medicare levy from 2% to 4%.
In The Tax Institute's view, the Government should undertake a comprehensive review of the current exemptions and special rules in the GST law to ensure they are still necessary and appropriate. Members can read more about our views in our Tax Discussion Paper submission.
The heart of the issue though is not about whether there should be a change to the GST or the Medicare levy. It's about where should the States and Territories source funding for the services they provide. Should this be from their own taxes they administer or sourced from Federal taxes such as the GST? Should it be from a combination of these taxes?
If so, what combination of these taxes is appropriate?
One thing is certain though - no change will be made to the GST unless all the States and Territories agree.
What do you think? Where do you sit on the “change the rate/change the base/no change" spectrum
Tell us your thoughts via Tax Policy.
Stephanie Caredes CTA is a Tax Counsel of The Tax Institute.