THE Commonwealth’s multibillion-dollar a year cash cow — the GST — should be retained as a State tax, according to a WA Liberal Party committee.

The six-person committee, which includes State president Norman Moore and three former members of the State and Federal parliaments, warned “competitive federalism would be best served” if all States could set their own rate of GST and keep the revenue.

The committee, formed to investigate the option of WA becoming a financially independent State, said in its report that horizontal fiscal equalisation should be implemented using the Commonwealth’s other sources of revenue — not the GST pool.

It also said the Australian Capital Territory and the Northern Territory were Federal responsibilities. The report comes ahead of Prime Minister Malcolm Turnbull’s arrival in Perth this week to spruik the Coalition’s $4.7 billion GST fix.

“The GST should be retained as a State tax and all of the revenue collected, less the cost of collection, should be returned to its respective State,” the internal Liberal Party report states.

“This would allow States to set their own GST rates. It would also potentially remove the need for States to set other taxes or find other means of obtaining revenue.

“At the same time, tied grants can be removed as the Federal Government relinquishes control over areas not specifically within its constitutional merit, such as education and health.”

The report said the current formula was a “great disincentive for States to solve their own financial problems by being productive”.

The WA Financial Independence report was born out of the 2017 WA Liberal State conference that debated a secession motion — dubbed WAxit.

“Unless the continuing centralisation of political and financial power is reversed, eventually, history may repeat itself and the people of WA demand secession,” the report concluded.

Committee members were Murray Nixon, Norman Moore, Alan Eggleston, Chris Hatton, Nathan Morton, Rick Palmer, Richard Pannell and Daniel White.