Dead bat played to strong call for tax reform
The Federal Government says it will not touch the GST, despite the top treasury official saying it should.
Secretary of the Department of the Treasury Martin Ferguson made the call in a speech to the Sydney Institute on Wednesday.
In his address, the Treasury boss said government revenue is coming to rely on personal income tax too much, and that GST or fuel excise changes would be a more efficient way to drum up funds.
“The relative share of total indirect taxes, including GST, continues its long-term decline,” he said.
“Contributing to this decline is the non-indexation of fuel excise, unlike other excise rates, and a rising proportion of consumption outside the GST net, for example, in increased health expenditure.
“It is hard to argue that this is either desirable or sustainable.”
Dr Parkinson pointed out New Zealand's success in raising its GST to 15 per cent and cutting personal income tax as an example of the potential benefits.
He said an upcoming White Paper on tax should consider “whether there is a role for a greater contribution from indirect taxes”, including the GST.
“Research consistently says that reduced reliance on income taxes and increased reliance on other, more efficient sources of revenue, including indirect taxes, can support higher growth and higher living standards by increasing workforce participation and lifting productivity,” he said.
Dr Parkinson’s job has been slightly tenuous since the change of government last September.
On the day he was sworn in, Prime Minister Tony Abbott said Dr Parkinson would leave his job after budget preparations in May, but reports now say he has been asked to stay on until after the G20 meetings in November.
The speech, which is understood to have been approved by Treasurer Joe Hockey before it was made, has put the Federal Government into a defensive mode.
Deputy Liberal leader Julie Bishop told ABC radio this morning that the party would keep its promise.
“We're not changing the GST,” the Foreign Minister said.
“Our promise for the last election was that there would be no increase to the GST and that's our position.”
Asked about potentially increasing the fuel excise tax, Ms Bishop said “there is no plan to do that”.
But added; “These are not matters that I intend to discuss prior to the budget.”
The Federal Government's White Paper on taxation will examine the GST, and is set to be released before the next election.