Prime minister unpersuaded by change in tax mix as Julie Bishop says government will make announcement ‘when we have a model ready’

This article is more than 4 years old

This article is more than 4 years old

The government faces pressure to explain what economic reform model it will take to voters before this year’s federal election after the prime minister, Malcolm Turnbull, all but admitted proposals to increase the goods and services tax were dead in the water.

Turnbull has stepped back from the idea of raising the GST to 15% and broadening its base to include fresh food and services like health and childcare.

On Sunday he revealed that he has not been won over by the proposal, which until recently he had argued “remained on the table”.

“I remain to be convinced or be persuaded that a tax mix switch of that kind would actually give us the economic benefit that you’d want in order to do such a big thing,” he told the ABC’s Insiders program.

The foreign affairs minister, Julie Bishop, later admitted that the government had not finalised a proposal to take to voters.

“The prime minister and treasurer will make an announcement on any proposed tax reforms in the lead up to the election,” she told reporters.

Asked when that announcement might be, Bishop replied: “When we have a model ready”.

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The prime minister flagged that states and territories should make changes to their taxation system, reiterating a demand he made on state governments to contribute to the ballooning health and education budgets.



“There are tax reform changes, particularly at the state level, which every economist will tell you would give you a very significant lift to GDP,” he said.

“For example, if you were to replace stamp duty on property transactions and replace it with a land tax, a general land tax, there isn’t a tax economist or theorist in the country that wouldn’t tell you that would be a good move.

“Taxes on transactions like sales of property obviously inhibit trade, they slow down economic activity. Everyone understands that. So that would get a policy tick. Political difficulty, however, is very, very high, possibly 11 out of 10, which is why nobody other than in the ACT has attempted it.”

The Greens want the government to decide on a model and take it to voters once and for all.

“Just end the uncertainty. The prime minister said he wanted to have a mature debate in this country about the issues that matter,” the leader of the Greens, Richard Di Natale, told reporters. “You don’t do that by floating a whole range of thought bubbles.

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“The GST is causing a lot of people in the community angst and I think it would be sensible for the prime minister to rule it out once and for all and take the Australian people into his confidence about the reforms that we will see as a nation when it comes to tax reform.”

Late last month the prime minister referred to the GST as a “relatively effective tax” that was being “actively considered by the government”.

The shadow treasurer, Chris Bowen, said Turnbull did not have “the guts” to take a GST increase to voters or to allow proper debate on economic reform.

Labor has been mounting a campaign against increasing the GST, with opposition leader Bill Shorten visiting grocery stores around the country to sell the message.

Bishop referred to the campaign as a “lettuce war” that prohibited “mature, sophisticated conversation” on the issue of tax reform.