Using GST hike to cut company tax unpopular in blue-ribbon coalition seats

There is little support in blue-ribbon Coalition electorates for using any extra revenue raised from a 15 per cent GST to cut company taxes, new polling shows.

Reducing company tax rates was by far the least popular option when voters in four coalition-held electorates were asked to choose between four alternative ways to use extra revenue if the GST rate is lifted to 15 per cent. Only 2.5 per cent to 4.5 per cent opted to use the money to cut company taxes.

Support for Mike Baird's proposed increase in GST is low.
Support for Mike Baird's proposed increase in GST is low. Photo: Katherine Griffiths

The most popular way to use additional GST revenue was boosting health, education and other government services. Other options more popular than cutting company tax rates was reducing Australia's debt and compensating low-income households. The electorates surveyed were New England, Page and Warringah in NSW along with the seat of Dickson in Queensland.

A tax reform plan announced by NSW Premier Mike Baird on Monday proposed increasing the rate of the GST to 15 per cent and using about a quarter of the proceeds to cut the company tax rate to 25 per cent from 30 per cent. Business groups are also pushing for a reduction in corporate taxes, saying it will boost economic growth.

But even among Liberal and Nationals voters in the Coalition-held seats surveyed, support for using additional GST proceeds to cut corporate taxes was low. In the seat of New England, held by Deputy Nationals Leader Barnaby Joyce, just 1.9 per cent of Nationals voters opted for the corporate tax cut option. In the Sydney seat of Warringah, held by former Prime Minister Tony Abbott, 5.6 per cent of Liberal voters favoured extra GST revenue being used to cut corporate taxes.

The ReachTEL poll, commissioned by the Australia Institute, showed a clear majority of voters opposed lifting the rate of the GST to 15 per cent in the electorates of Page (64.8 per cent), Dickson (58.3 per cent) and New England (55.9 per cent). In the seat of Warringah, 46.5 per cent of voters were opposed an increase to the GST compared with 39.4 per cent in support of the increase. 


Under Mr Baird's proposal the federal government would keep almost all the $32.5 billion in extra revenue raised each year by a 15 per cent GST from 2017-18 to 2019-20. This could be used to fund company tax cuts, personal income tax reductions and to compensation low income earners. In return the states would be allocated an extra $7 billion in the period to cover cuts to schools and hospitals funding revealed in the 2014 federal budget. Funding for state services beyond 2020 would then be re-negotiated.

Mr Baird said the proposed tax revamp is a "consensus position" that aims to place a "secure foundation under our health and education system."

But the Executive Director of The Australia Institute, Ben Oquist​, questioned why Mr Baird would settle for states receiving such a small portion of the additional GST revenue.

"The NSW proposal would see a maximum of 5.5 per cent of the new revenue sent to states to help restore a fraction of the federal funding cuts to health and education services," he said.

Analysis by the Institute shows that the amount NSW would get from the deal would only cover the equivalent of six days of the NSW health spending.