GST carve up inquiry final report delayed

Lisa Martin
(Australian Associated Press)

The federal government won’t receive the final report from an inquiry into the GST revenue carve up between states and territories until after the May budget.

It had been due to hand in its report at the end of January, but the Treasurer Scott Morrison extended the deadline to May 15, a week after this year’s federal budget is handed down.

The commission has held public hearings across the country since handing down its draft report.

Mr Morrison said it is important that the commission has sufficient time to work through the information and to undertake further analysis and consultation on key issues.

“The commonwealth will continue to consider any shorter term impacts of the current weaknesses in the GST distribution system in the normal budgetary cycle,” he said in a statement.

The draft report released in October found the present system means states and territories have a disincentive to undertake positive changes to their tax systems and make the most of the resources and minerals they have.

The commission said providing top-ups or setting a GST floor are not longer-term solutions.

Instead, the report recommended resetting the system, from “full” equalisation – now interpreted as bringing everyone up to the fiscal standard of the strongest state – to a more practical objective of “reasonable”.

Western Australia has been particularly critical of the distribution system because its share sunk as low as 30 cents in the dollar of GST revenue due to the state’s prior strength from the mining boom.


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Categories: Tax