Federal Politics

Michaelia Cash comments suggests light still burns inside Turnbull government for GST rise

Scott Morrison looked to have killed it, and most thought Malcolm Turnbull had put it down as well, but it seems the GST is a candle that just won't blow out.

GST would hit poor hardest

Treasury modelling on the GST reveals the most vulnerable could be hit the hardest Fairfax's Peter Martin explains why.

Speaking on television on Monday night, cabinet minister Michaelia Cash breathed fresh life into the politically toxic tax hike her colleagues, and the public too, had assumed was now officially off the agenda.

Defending the Turnbull government's fast atrophying reform muscle, the Employment Minister from the party's right faction rejected the assertion that the government was "at sea" on tax reform and other difficult issues, instead explaining that it was having a national conversation with the people for which it was receiving "positive feedback".

From Monday, the Australian Public Service will roll out the most comprehensive strikes in its two-year dispute with the ...
From Monday, the Australian Public Service will roll out the most comprehensive strikes in its two-year dispute with the Government. Pictures is Public Service Minister Michaelia Cash Photo: Janie Barrett

"Well, you've taken the GST off the table though, not everything is on the table," pressed Sky News veteran broadcaster, Helen Dalley.

"We haven't taken it off the table completely, not at all," responded Senator Cash.

The admission suggests that in the inner sanctum of the government, the light still burns for the expanded consumption tax that both Mr Turnbull and Mr Morrison have publicly disowned, despite the view it is the only way in which to raise the revenue needed to reduce income tax rates and perhaps even cut company taxes.

Asked about the minister's GST comments, Mr Turnbull on Tuesday morning stressed the government "will not be taking a proposal to increase the GST to the election".

"I have no doubt people will be talking about GST for a long time. The work we have done demonstrates that the so-called GST tax mix switch does not give you the economic dividend, the growth dividend that would justify doing it."

On Monday Mr Morrison explained that the government was able to dismiss the GST option because it had "done the work" of examining its benefits to the economy.

But the opposition is having none of the government's latest prevarications, branding them "wobbles" on Mr Turnbull's part over tax reform.

"They say they want to have tax reform, and the only reform they can think of is a 15 cent GST on everything," said Labor leader Bill Shorten.

He described a bigger GST as a "big fat zero for the nation" and a "lazy tax".

"I cannot believe that after six months of talking, and waffling, the federal government is still contemplating a 15 per cent GST," he said.

"It is a divided government where you've got ministers going in all sorts of directions."

Treasury modelling of the growth impacts of the modest income tax cuts able to be funded by the extra GST revenue, found its impact on overall economic growth was positive, but only marginal. Mr Morrison had been enthusiastic nonetheless, arguing within the government that "every inch" of growth was worth pursuing.

The government however eventually concluded that the political costs of pursuing the hike, were far greater than the tiny economic gains - described in the jargon as the "growth dividend".

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