ACT Chief Minister Katy Gallagher has broken ranks with her Labor colleagues and backed coalition plans to include the GST in a review of the taxation system. Photo: Jeffrey Chan
Chief Minister Katy Gallagher has broken with her federal Labor colleagues by backing Coalition moves to include the goods and services tax in a proposed review of the tax system.
Federal Labor opposed the introduction of the tax and has consistently ruled out increasing the rate of GST from 10 per cent.
But Ms Gallagher said on Monday the GST was a ''tried, tested and efficient tax'' that should be considered as part of any future tax reforms.
Federal Opposition Leader Tony Abbott has indicated that the GST could be included in a review of the tax system if the Coalition is elected in September.
Prime Minister Julia Gillard said on Monday ''we've undertaken tax reform and we will never support an increase to the rate of the GST or broadening its base''.
''That is the plan of the other side of politics, front and centre now,'' she said.
When Ken Henry was commissioned to review the tax system in 2008, the then treasury secretary was directed by the government not to consider increasing the GST.
But Ms Gallagher said the federal government should examine how it raised money that was distributed back to the states and territories.
The GST, while ''politically difficult'', was one of those measures.
''I think just looking at it would be useful,'' Ms Gallagher said.
''The Commonwealth has the capacity to raise revenue through efficient taxes - the GST is one of them and as [the cost of] things like health continue to grow, they're going to have to look at how they generate their own revenue for distribution back to the states and territories.''
Ms Gallagher said it was disappointing that past taxation reviews had not included the GST.
''I think it was a concern of the Henry tax review that it was excluded from there - how do you have a review of Australia's taxation system and not discuss the GST?'' she said.
The ACT relies on the GST more than other states and territories because it doesn't have the same income streams from industries - in particular, mining.
The federal budget included a reduction in GST revenue forecasts for 2013-14 due to continuing consumer caution.
Last week, the ACT government said this could result in a $49 million reduction in GST payments to the territory over four years.
But Ms Gallagher said the GST did not have to be discussed only in terms of increasing it.
The ACT government is implementing its own tax reforms, including a gradual phasing out of stamp duty.
The Chief Minister said pressure was growing on other states to reduce their own ''inefficient transaction-based taxes''.
''If you're wanting to drive tax reform then surely you should be able to look at how they all interact with each other without necessarily just assuming it's going to be a tax take,'' Ms Gallagher said.
''As someone who's been through a tax reform election, I understand you can play very good politics with it … But I can't see why you wouldn't have a look [at] it, why you'd exclude it if you're going to have a tax review.''
Mr Abbott said the Coalition had no plans to raise or expand the GST.
''We have no plans whatsoever, absolutely no plans to do anything to the GST,'' he told reporters in western Sydney on Monday.