Treasury is looking to grab more of our cash through the GST.
Treasury is looking to grab more of our cash through the GST. Barry Leddicoat

Abbott, Hockey rule out Treasury call for GST hikes

THE Abbott Government has rejected a call from its top Treasury official to consider raising taxes including the GST.

Senior government figures including deputy Liberal leader Julie Bishop and Treasurer Joe Hockey ruled out any changes to the GST on Thursday.

Their comments followed a speech by Treasury Secretary Dr Martin Parkinson that governments would have to deal with the falling revenues by considering changes to the GST or fuel excises.

He also said a crucial part of addressing the looming budget problems would be creating a conversation with Australians to "reset expectations" on what government could actually afford to deliver.

But Ms Bishop, speaking to the ABC on Thursday ruled out any such changes, echoing similar sentiments from Mr Hockey and Prime Minister Tony Abbott that more taxes were not the answer.

Mr Abbott, since before the election, has been adamant that changes to the GST particularly would not be considered by the government in its first term.

Rather, if the government were to consider such changes, it was expected the Coalition would seek to create support for it during the 44th Parliament, in order to get a mandate from the people should it succeed in gaining a second term of government.

But while Dr Parkinson's comments added weight to Mr Hockey's recent statements that all Australians would "need to do the heavy lifting", the government is unlikely to reveal the full gamut of changes until it releases its first budget in May.

 

Call to expand GST to include health care, fuel excise

FEDERAL Treasury boss Martin Parkinson has called for an expansion of the Goods and Services Tax to include health care and greater revenue from fuel excise.

In a speech to the Sydney Institute on Wednesday night, Dr Parkinson suggested fuel excise should be indexed - something former prime minister John Howard froze indefinitely in 2001.

Indexing the fuel excise would see it increase in line with inflation.

Dr Parkinson said without changes, government revenue would increasingly rely on personal income tax, which is less efficient than consumption-based taxes, the ABC reports.

"We will move even further in this direction if, as we anticipate, the relative share of total indirect taxes, including GST, continues its long-term decline," he said.

"Contributing to this decline is the non-indexation of fuel excise, unlike other excise rates, and a rising proportion of consumption outside the GST net, for example, in increased health expenditure.

"It is hard to argue that this is either desirable or sustainable.

"Continued increases in the personal income tax burden will hit lower and middle income earners with higher marginal and average tax rates.

"This will have adverse labour force participation impacts, while sharpening incentives for tax minimisation by higher income earners."

Dr Parkinson said the National Disability Insurance Scheme and school reform funding would add $3.1 billion and $2.8 billion to total spending.

The net cost to the Commonwealth of the of the NDIS would be $11.3 billion per annum by 2023-24.

"What is less well understood is that total Commonwealth expenditure on health is anticipated to rise from $64.7 billion in nominal terms to $116 billion in 2023-24."

"Similarly, our three main pension payments - the aged pension, disability support pension and carers' payment - grow at an annual rate of 6 per cent per annum in nominal terms over the forward estimates, adding around $13 billion to annual payments by 2016-17, and another $39 billion by 2023-24."

Prime Minister Tony Abbott, who has ordered a review of Australia's tax system, promised last year that there would be no increase to GST under a Coalition government.
 



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