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Jay’s fear: not a new tax, but a new tax system

Mar 30, 2015
Premier Jay Weatherill believes the Federal Government's tax reform package is all about broadening or increasing the GST.

Premier Jay Weatherill believes the Federal Government's tax reform package is all about broadening or increasing the GST.

Jay Weatherill has dismissed federal Treasurer Joe Hockey’s wide-ranging discussion paper on tax reform as a confidence trick designed to overhaul the GST.

Despite his own Government undertaking its own review of state taxes, the Premier has lashed out at the Commonwealth review, warning “if you read between the lines it’s all designed to force the states to choose an increase in the GST or an expansion of its scope”.

“That’s consistent with Liberal Party philosophy,” Weatherill told InDaily.

Indeed, Hockey concedes he now wants a “fair dinkum conversation” with the states about GST reform, but insists without universal approval, there will be no change to current arrangements.

“That’s it, end of story,” he said.

Hockey meets with his state counterparts in a fortnight.

“Now that there are no state elections, maybe, just maybe, we can have a fair dinkum discussion about the best interests of the nation without having parochial interests at play,” he said.

But the Weatherill Government appears set to remain a stumbling block to reform.

“It’s a policy position,” said the Premier.

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“It’s not a question of being short-sighted; we’re doing it with our eyes open. We think it’s a tax which will place a higher burden on people that can least afford it.

“Most people on lower incomes spend almost all they earn, so any consumption tax becomes a flat tax that hits those that can least afford it the hardest.”

Weatherill said a “good starting point” for national reform would be to “get companies to pay the tax they’re meant to pay”, target “incredibly generous superannuation arrangements” and examine broad reform of the financial services sector.

“We think that would be a good starting point,” he said.

“All those should be explored before you start looking at placing a greater burden on ordinary families.”

While the discussion paper rules out changing the rate or breadth of the consumption tax without universal assent, Weatherill warns “there’s more than one way to skin a cat”.

“With the stroke of a pen, Hockey can fundamentally change the way the GST is distributed, according to horizontal fiscal equalisation, which for us is probably even more important in terms of actual dollars into the state,” he said.

He said WA is pushing to receive the lion’s share of revenue, “which is incredibly rich”.

“WA hit the jackpot (in the mining boom) and now they want to change the rules of the game halfway through,” he said.

The Premier said his Government’s own tax review was about “getting our own house in order … so we can go to the national Government and say ‘we’ve reformed our system’”.

 

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