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Tax white paper: why Turnbull killed the green paper and probably a higher GST

The tax white paper is dead. So too, most probably, is an increase in the GST.

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Compensation would need to be considered for some Australians before any decisions are made about tax changes, including a GST hike according to Malcolm Turnbull.

The Prime Minister killed the white paper because he ran out of time.

Tony Abbott had promised it "well within" three years of his election and then sat on the discussion paper and never got around to releasing the green paper.

Here's how it was supposed to work. The discussion paper gets the electorate to sign off on the problem, to understand what's at stake. The green paper airs the options for fixing it and seeks feedback, which is used to create the white paper, which sets out what the government will actually do.

Abbott can't be faulted for the concept, merely its execution.


Turnbull's problem now is that is that by just announcing the tax measures in the budget as he says he will do, he'll take people by surprise.

"The danger is it'll be like the first Abbott budget, dropping decisions out of the blue and being hit with a backlash," says former Liberal leader John Hewson, who now chairs the Australian National University's Tax and Transfer Unit.

"It's raised a lot of expectations, all this talk about all options being on the table, and there will be no apparent process about the way in which they are taken off."

Turnbull began removing the GST option on Friday.

He said the first question was whether he wanted to raise more tax overall. He did not. The second was whether the upheaval of a higher GST and the compensation it would necessitate would produce "a productivity benefit, a growth dividend that justifies the trouble". He left the clear impression it would not, an impression backed up the Treasury's discussion paper.

It's a messy way to handle something so important, but it is more Abbott's fault than his.

Peter Martin is economics editor of The Age.

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