The Treasurer, Joe Hockey, has opened the door to a rise in the GST if state premiers make the case for it, but says any change to the consumption tax would be taken to an election.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The federal government has promised two white papers that will examine the tax system and the federation.
The federal budget has foreshadowed about $80 billion in cuts to federal grants to schools and hospitals over the next decade, sparking a furious reaction from state premiers who have accused Canberra of trying to “starve them out” and force them to request a rise in the GST.
Mr Hockey told the Ten Network on Sunday that he would not promise to stop the states if they agreed to a rise in the GST.
“Well, no, because what we're saying is we have a tax white paper, a process for looking at tax, we promised the Australian people we would not introduce, increase or widen or broaden or change the GST in this term of government," he said.
“We're honouring our promise. If there is to be a change to the GST, or substantial changes in taxation, we will take that to the next election.”
“The process at the moment is to sit down with the states and work through all the issues and also be up front with the Australian people.”
State premiers are meeting in Sydney to discuss the fall out from the budget on Sunday.
Earlier, the Prime Minister, Tony Abbott, said he was not proposing the GST should rise to cover the looming shortfall in funding to state budgets and that any proposal to raise the tax was a matter for the states.
“I don't propose changing the GST at all because the GST is a state tax. The revenue all goes to the states," Mr Abbott said.
The opposition treasury spokesman, Chris Bowen, told Sky News on Sunday the ALP would engage in the coming debate about possible changes to the GST.
"We're more than happy to have a debate," he said. “A GST discussion; we've never said there shouldn't be a discussion”.
“The GST inevitably hits low income earners more than high income earners.”
"We don't support broadening the base, we don't support increasing the rate [of the GST]."
The former Labor treasurer said he had considered a deficit levy for "about seven seconds" when in government but ruled it out as it was not good policy.
However, he signalled Labor would allow the measure to be brought in by the Abbott government.
