Will Australia's GST Increase? A Look At The Government's Tax Reform Review

09/02/2016 12:45 PM AEDT | Updated 15/07/2016 12:51 PM AEST
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CANBERRA -- So is the GST going up? Depending on who you listen to, the answer is either "definitely," "possibly," "nope" or somewhere in the middle.

Australians currently pay a Goods and Services Tax of 10 percent on a wide range of, well, goods and services -- alcohol, cake, hiring a plumber -- with revenue raised then received by the states to fund things like hospitals, schools and roads. Prime Minister Malcolm Turnbull ascended to the top job in September 2015 and soon set about telling everyone that tax reform was in his sights.

For some time now, the Labor opposition has been running a campaign claiming that "tax reform" means a rise in the GST to 15 percent. The government has helped them along the way with media reports as early as September that GST changes were being considered to possibly fund income tax cuts, as part of a vaunted "root and branch" review of the tax system.

Bill Shorten has been shoehorning "15 percent GST" into as many sentences as he can -- "I like lettuce. I like dark stem lettuce. I don’t like lettuce with 15 per cent GST," was the one of the Labor leader's latest -- as Turnbull and treasurer Scott Morrison repeatedly batted away questions by hammering home the point that "everything is on the table" in a discussion about tax reform. Little was said to hint that GST changes were not being considered.

Shorten's relentless sloganeering, however, seems to have been effective. In the past week, as the true unpopularity of such a tax rise began to properly sink in, the government has sought to hose down speculation of a GST jump.

"You have to be satisfied that it is actually going to deliver an improvement in GDP growth," Turnbull said this week.

"Unless you can be satisfied that it's going to do that, and that it's going to be fair, of course, which is equally important, then you wouldn't do it."

A "confidential" Question Time rebuttal to a Labor attack on the Coalition's savings plans was accidentally (?) leaked by the PM himself on Friday.

(We can confirm that Turnbull did not call shadow treasurer Chris Bowen a "bantam rooster" in question time on Monday.)

Morrison also this week conceded a GST rise would be very unlikely at this stage.

"With something as difficult as this, the Red Sea is not going to part every time for you,' he told 2GB radio host Ray Hadley.

Morrison, however, also said he would have liked the chance to keep GST changes on the table as a way of funding tax cuts in other areas.

"The only reason we were looking at issues and continue to investigate those is because it gives the only opportunity there is for very big income tax cuts," he said on Monday.

A planned meeting for state and territories in March, to discuss the tax agenda, was cancelled on Monday due to the "uncertain" future of tax in Australia. The Council for the Australian Federation meeting, to have been held in Darwin, was canned as speculation swirls about what will happen next.

“Since I wrote to you, the national tax reform discussion has become even more uncertain,” Northern Territory chief minister Adam Giles wrote in a letter to his counterparts.

“Until such time the prime minister provides greater clarity with the commonwealth’s propose tax reform package, any CAF discussion would only be speculative and add little to the national conversation. I therefore recommend that any further discussion around taxation reform is deferred.”

Labor jumped on the news, changing their focus of attack to paint the apparent backdown as a reflection of Turnbull's leadership.

"Whether it’s ministers embroiled in scandals or a government in search of a tax policy, it’s very clear that Malcolm Turnbull had a plan to knock off Tony Abbott but has very little idea on how to govern Australia," shadow treasurer Chris Bowen said on Tuesday.

"The fact of the matter is that Malcolm Turnbull and Scott Morrison embarked on a path to increase the GST, the fact of the matter is that on Sunday Malcolm Turnbull scared off his backbench, was starting to crabwalk away and yet yesterday we saw the Treasurer scrambling to make sure that the GST remains firmly on the table."

Bowen also claimed: "If he doesn't proceed with increasing the GST... it will be humiliating for Malcolm Turnbull... what would be the point of a Turnbull government if it doesn't have a tax reform agenda?"

Veteran Labor senator Doug Cameron was more blunt in his assessment.

So, at this stage, your wallet and bank card may be spared the hurt of a 50 percent increase in GST, from 10 percent to 15 percent. A tax white paper is on its way though, meaning we'll likely be hearing more about tax changes before too long. Don't go celebrating just yet.

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