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Raise state taxes to solve revenue shortfall: Turnbull


UPDATED: Prime Minister Malcolm Turnbull has poured cold water over Jay Weatherill’s push to increase the GST rate, suggesting states should solve their own revenue problem by increasing “efficient” land and payroll taxes.

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On Adelaide radio today, Turnbull argued “the states cannot disclaim responsibility for raising revenue”, saying second-tier governments “have got to be prepared to go to their citizens and say, ‘We need to raise money to spend on our schools and hospitals’”.

“Now, when you say that to them, they recoil at the political horror and say ‘No, the Federal Government should do it’,” Turnbull told FIVEaa.

“[But] actually some of the most efficient tax bases in Australia are state tax bases like land tax and payroll tax.”

The PM sought to talk down the Premier’s insistence that the tax debate was a revenue, rather than a spending, issue, saying: “I don’t agree with Jay’s agenda of raising more tax to spend more.”

“We are not going to raise more tax overall [and] any changes are going to be rigorously fair, absolutely fair,” he said.

“But nonetheless I thank him for making a thoughtful contribution.”

He said the states collectively had “got themselves into a way of thinking that every time they need more money, they just go to the ATM of the Federal Government”.

“When we said to them at COAG at the end of last year, ‘Okay, you guys, you’re sovereign governments, you have tax bases of your own… what are you going to do about that?’ And they say, ‘Oh that would be politically difficult’,” Turnbull claimed.

“And you say ‘Well, but you’re asking us to put up the GST to help you… do you reckon that’s politically easy?’”

Weatherill responded by insisting “health funding is now shaping as the key federal election issue”.

“I have been very clear, I will not accept a rise in the GST unless there is a revenue fix that covers the $80 billion in health and education cuts,” the Premier said in a statement.

“The Prime Minister must level with the Australian people. Even after a cut of $80 billion in spending on education and heath his federal budget is $37.4b in deficit… both myself and Premier Mike Baird have put forward proposals directed at solving the imminent health funding crisis which will eventually hit more than $30 billion per annum.”

Turnbull said his Government was assessing all arguments “in a very careful way” but was disinclined to raise “more tax overall”.

“You could raise the GST and devote the money raised to reducing income tax, there’s no doubt you could do that… [but] the problem with that is that in order to make that fair, you would have to naturally increase pensions… there’s obviously got to be a lot of compensation,” he said.

Turnbull acknowledged “we do need to spend more money on health”, but argued “we’ve got to make sure that the health system is run more efficiently” and “the onus has got to be on the states who run the public hospital system”.

“They are businesses that the states own and operate,” he said.

He said whatever course his Government takes will be detailed in the May budget “and we will likely make announcements between now and then”.

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