The Never-Ever Tax Debate That Turnbull Dares To Have

Australian notes scattered on a table. Click to see more...
pamspix via Getty Images
Australian notes scattered on a table. Click to see more...

CANBERRA -- Are you getting the feeling our politicians are again softening us up for something we probably won’t like very much?

Amid a day when the Turnbull Government dumped the almost universally unpopular Australian knights and dames honours system, Government types are furiously going out of their way to not say too much about a politically risky possible expansion of the Goods and Services Tax (GST).

“Everything is on the table”, pure “speculation” and open to a backbencher to do official economic research at the “higher end” of the tax debate.

New South Wales Nationals member David Gillespie swears he is not part of a co-ordinated Government campaign, but asked the Parliamentary Budget Office (PBO) to check out what would happen if Australia adopted New Zealand’s broader and higher (15 percent) GST system.

The PBO found such a move would well address Australia’s revenue problem by raising an extra $65.6 billion dollars in 2017-18, or effectively double revenue, but the Treasurer Scott Morrison has labelled it as an “extreme” move.

"(It's) at the pretty extreme end of the options you can technically consider, but that said at least he's part of it and he's having a contribution,” Morrison told Macquarie Radio.

The extra money would, like the rest, go to the states and territories, and according to Gillespie, pay for income tax cuts and higher pensions and welfare payments.

The Prime Minister has described Gillespie’s contribution as “very thoughtful”.

“I did something myself when I was a backbencher some years ago, and I think it's really important that we get lots of ideas out there and lots of discussion, but it's premature to say that the Government has landed on one particular change or another,” he told reporters in Sydney.

It is “not Government’s position, it is even not the Nationals position”, but according to the Treasurer it is worth considering.

“What David’s model does is it explains that when you go, if you were to go down that path then there needs to be compensation delivered through the payment system, there needs to be other very large scale income tax reform,” Morrison told Sky News.

Gillespie’s modelling now forms a submission to the White Paper process on tax reform, which senior members of the Turnbull Government are not denying will lead to an expanded GST.

This is tax debate that Tony Abbott would not and could not have. After infamously saying on election eve to SBS News, way back in 2013 that there would no changes to the GST, Abbott was caught in a trap of his own making.

Turnbull is still bound to Abbott’s word, but still on the post-coup honeymoon he can certainly afford to canvass unpopular options.

Australia’s GST is charged at a rate of 10 percent and applies to 47 percent of consumption in Australia, excluding fresh food, health and education.

Earlier reports found that if the GST was applied to fresh food alone, it would rise an extra six billion dollars.

In a point of political difference, the Federal Opposition has vowed to fight GST reform at the next election.

Labor expects an increased GST rate of 15 percent would cost the average Australian family an extra $5,000 a year.

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