ACT News

Chief Minister Andrew Barr caught in the middle on GST increase

Chief Minister Andrew Barr has found himself caught in the middle of debate about a possible increase to the GST, winning praise from the property sector and political heat from unions on the same day. 

On Wednesday, Mr Barr gave further support to an increase to the tax in order to allow the ACT government to move faster to abolish stamp duty. He said Canberra would not stand in the way of a goods and services tax increase if it came with compensation for low-income taxpayers and help for state and territory governments to fund services. 

The Turnbull government is canvassing plans to increase the GST rate but requires the support of state governments. 

Lobby group the Property Council of Australia welcomed Mr Barr's support for an increase to the tax on Thursday. Executive director Catherine Carter said stamp duty was an "unreliable and inefficient roller-coaster of a tax" that should be abolished.

She said land tax could not be increased to fully replace the revenue lost from stamp duty.

She said property income was the territory's largest source of revenue, including profits from land sales, general rates and other levies from the ACT government. 

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On the other side of the debate, Unions ACT secretary Alex White said political leaders "must categorically rule out supporting any increase to the GST" to 15 per cent because the change would disproportionately impact workers and benefit high-income earners.

He wrote to Mr Barr after the organisation's executive passed a motion supporting the ACTU's position on tax and preparing to campaign against any possible increase to the GST. The Coalition could take an increase to next year's federal election. 

"We are calling on national leaders to discuss taxation reforms that will increase fairness and equity in our tax and revenue system, and allow governments to fund important public services, infrastructure and a decent social protection floor," Mr White's letter said. 

He said tax reform should be used to fund public services, public infrastructure and social programs. 

"Locally, unions will be campaigning actively to ensure that the tax debate focuses on fairness and equity," Mr White said.

Earlier this month, Treasurer Scott Morrison said Australia had "a spending problem, not a revenue problem" and that no increased GST revenue would be used to boost the overall tax take.

A recent Fairfax Ipsos poll found more than half of Australian voters would back an increase in the 10 per cent GST if it came with compensation for the poor and reductions to other taxes.

Mr Barr said recent economic modelling showed increasing the GST to 15 per cent would impact the average Australian household by about $4,000 annually. 

"Any increase in the GST must be taken to an election. Labor has indicated that it will oppose an increase to the GST at the next election," Mr Barr said.  

"If you vote Liberal, you're voting for an increase in the GST." 

He would not stand in the way of a GST increase if it met a list of "preconditions" - including the changes being taken to the 2016 election, legislation passing the federal Parliament, a compensation package for low-income earners and measures to reduce state and territory taxes.

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