Tony Abbott's proposed GST changes labelled the 'least of all evils'

Updated

Tony Abbott's proposed changes to the Goods and Services Tax (GST) are a necessary evil, the nation's public policy think tank says.

The Prime Minister said at the weekend the Government was ready to work with the states on changes to the tax, by either lifting the rate of the GST or broadening its base.

His comments sparked renewed debate about whether the GST should be changed.

"I'm inviting Australians to enter into a debate, a mature debate about an important subject rather than dig trenches and hurl insults at each other," he said.

The chief executive of the Grattan Institute, John Daley, backed Mr Abbott.

He said while changing the tax might be unpopular, it could generate as much as $14 billion a year.

"Given where we are, the alternatives are much worse," he said.

"We've seen what happens in Europe if governments let their budgets get out of control and stay out of control for a long time.

"It certainly looks as though governments across Australia are starting to realise that they have a problem, and increasing GST by broadening it or by lifting the rate is probably the least of all evils; given that they do need to fund an increasing number of services that the public is asking for."

Meanwhile, West Australian Premier Colin Barnett reiterated his threat to vote down any changes to the GST.

"At least the Prime Minister is acknowledging now that the GST system is failing," he said.

"The four big states, New South Wales, Victoria, Queensland and Western Australia, last year all agreed the GST should be allocated on a population basis.

"There will be no change to the GST rate or coverage until the distribution is made fairer.

"Western Australia can stop that. Unless I sign on the line, it cannot happen."

Mr Barnett has consistently said he would not consider any changes to the tax, unless the Federal Government altered its carve-up.

The Federal Opposition used Question Time to attack the Government on the issue.

Opposition Leader Bill Shorten cited the Prime Minister's pre-election commitment not to change the GST.

"Given the Prime Minister has broken so many promises he made before the election, when will he break his promise that the GST is not going to change?" he said.

Topics: tax, government-and-politics, federal-government, abbott-tony, federal---state-issues, australia

First posted