Treasurer Joe Hockey puts GST increase on agenda ahead of states and territories summit

Updated

Federal Treasurer Joe Hockey is calling on the states and territories to have a "sensible, mature debate about long-term tax reform", that could include dropping their opposition to increasing the GST.

Mr Hockey will make the call in a speech later today, which comes ahead of a summit between the Prime Minister and state and territory leaders next week.

"With all of the premiers and chief ministers meeting with the Prime Minister next week at the leaders' retreat, there is a real opportunity for a constructive discussion about reforming our federation," Mr Hockey said in excerpts from the speech to be delivered to a PricewaterhouseCoopers tax reform forum.

"This must include the states taking responsibility for their own budgets in order to ensure they can afford their ever increasing expenditure — such as the costs of their public hospital systems as our population ages into the future."

The Government released a tax discussion paper earlier this year, which will feed into a tax options paper due for release later this year.

"Many submissions have called for the abolition of these taxes and a broadening of the GST base, or an increase to the rate, or both," Mr Hockey said.

"But when it comes to the GST, let me be very clear: no change will be considered without the unanimous agreement of state and territory governments and bipartisan support in the Federal Parliament."

The Treasurer refused to make an outright call for an increase to the GST in an interview with ABC TV, stressing instead the need for broad reform.

"The silver bullet in tax reform is not increasing or broadening the GST, it's about having a considered approach to the entire tax base," Mr Hockey said.

Speaking on 774 ABC Melbourne, Victorian Premier Daniel Andrews said he would not "cop" a general increase to the GST.

"It's a brutally efficient tax but it has no regard for a person's ability to pay, and on that basis I'll be very clear — Victoria will not support fundamental changes to the GST," Mr Andrews said.

"I'm happy to have a rational, important discussion about this, but our position is very clear. We're not having it jacked up to 15 [per cent], and we're not going to be having [it] on food and the basics of life."

He said recent cuts to education and health had put pressure on the states to make up the funding difference.

"The Federal Government would like the states to either pay for those cuts ourselves or be blackmailed into changing the tax system where you just throw equity out the window," he said.

WA Premier Colin Barnett said the state would not agree to any changes to the GST unless it was guaranteed a floor of at least 50 cents in the dollar.

"At the moment Western Australians who pay GST only get back 30 cents in the dollar," Mr Barnett said.

"We want a guarantee of at least 50 cents in the dollar coming back.

"That's in fact incredibly generous of this state because it means up to 50 cents could be given to other states like Tasmania and South Australia."

Mr Barnett did not weigh in on whether the states should take more responsibility for funding schools and hospitals but indicated a higher GST rate would be needed if that happened.

"I think in the longer term there is an argument for a slightly higher rate of GST and removing some of the exemptions if that's to provide the funding which the states require for education and health," he said.

Topics: tax, government-and-politics, states-and-territories, federal-government, australia

First posted