Premier Jay Weatherill has warned Treasurer Joe Hockey that he should not use proceeds from a potential hike in the GST to pay for personal tax cuts.
Hockey announced this week he wanted to take personal tax cuts to the next election, but gave little indication about how he would pay for them.
Weatherill, who supports an open discussion on increasing the GST take, said he was concerned that Hockey might be planning to use extra revenue from broadening or increasing the GST to pay for these cuts instead of using the funds to cover a budget shortfall in health.
For his part, the Premier appears to be firming in favour of a lift in the GST rate to fill what he says is a huge budget hole.
On ABC-TV’s Lateline program last night, the Premier was asked: “You along with (NSW Premier) Mike Baird have accepted the idea it may be necessary to raise the GST from 10 to 15 per cent. In spite of the political opposition that’s emerged, do you still think that’s a good idea?”
Weatherill replied: “Absolutely. I mean, we’ve got to be honest about the size of the problem here.”
This problem, he said, was a lack of funds to meet the nation’s basic health care needs, stemming from Commonwealth cuts.
Before Prime Minister Tony Abbott’s summit with state leaders in July, Baird suggested an increase in the GST to deal with a shortfall in health funding he estimated at $35 billion.
Baird’s proposal to increase the GST from 10 per cent to 15 per cent included a compensation package for households earning up to $100,000 to ensure they’re not disadvantaged.
In the lead-up to the summit, Weatherill said he was open to a discussion about Baird’s proposal, putting him at odds with federal and interstate Labor figures who are opposed to an increase in the GST rate.
Earlier this week, Treasurer Hockey this week announced he intended to take personal tax cuts to next election, but gave little information about how they would be funded. He did, however, hint at broadening the reach of the GST.
Last night, Weatherill said Australia had a revenue problem – not a spending problem – and the “nation’s reserves” should be spent on health care, not tax cuts.
He said Australia’s health spending, as a proportion of the economy, was among the lowest of the advanced economies.
“What there is is a massive hole, a massive gap between what we raise in terms of revenue and what we are going to need to spend our health care system.”
Weatherill said he was disturbed by Hockey’s rhetoric this week, and that the “first call” on the nation’s finances should be paying for basic health care services.
“Joe hated the idea of the premiers getting together across the nation to actually address this hole that he, in part, created through his cuts in the first budget, ’cause he knew what it meant,” he said.
“He wanted to spend any revenue that might’ve been raised on tax cuts to his mates.”
The Premier’s own rhetoric has come a long way in a short time.
In April, he said an increase in the GST would hit the poorest people the hardest and claimed the Federal Government’s deep budget cuts were a “game” to make the states come begging for a GST increase.
In June, he raised the possibility of broadening the GST to cover financial services.
Then in July he said he was in favour of an open discussion on raising the GST, as long as low income earners could be protected.
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