The latest GST push and reading between the lines

Last weekend Australian Prime Minister, Tony Abbott put the goods and services tax (GST) back on the table. Last night Mr Abbott gave a speech to the Business Council of Australia (BCA), challenging big business to lead the “fight” for tax reform and to help convince the Labor party (ALP) “to join team Australia and think of our country and not the next election.” Despite Mr Abbott saying pre-election that “the GST will not change, full stop, end of story” on Monday he confirmed that changes to the GST would “all be looked at as part of the federation reform process and as part of the tax reform process”.

The current government is clearly pro big business, with Mr Abbott taking big business leaders on his first overseas trip to Indonesia last year and other trips to China, America (USA) and Canada declaring that “Australia is open for business.” Business magnate Rupert Murdoch was invited this month by Australian Treasurer, Joe Hockey to address the Group of twenty (G20) dinner, for finance ministers in Washington for the International Money Fund’s (IMF) annual meeting.The first time that someone from outside the G20 has addressed the group.

And speaking of big business influence let’s not forget the enormous influence on the government wielded by the Institute of Public Affairs (IPA). It’s founders being a group of business leaders that included Mr Murdoch’s father, Sir Keith Murdoch. And according to their website: The IPA was formed in 1943 to provide a firm philosophical grounding for free market policy and ideas because it believed the then Labor government wanted to exploit wartime circumstances to massively increase the role of the Commonwealth government, taking powers from state governments, and undermining the freedom of citizens. Rupert Murdoch served on the IPA Council in the years 1986 through to 2000 and he gave the key note address for the IPA’s 70th anniversary last year.

The IPA also last year came up with a seventy-five point list of ideas for the government and buoyed by positive government feedback it came back with a further twenty-five ideas. Amongst the second lot of ideas was their GST and health policies: 78. Extend the GST to cover all goods and services but return all extra revenue to taxpayers through cutting other taxes. And 79. Abolish the federal department of health and return health policy to the states. 

The BCA released their paper ‘The Future of Tax Australia’s Current Tax System’ in September this year, and this sentence is of particular interest: Vertical fiscal imbalance will be exacerbated over time as demand for health services increase while the tax base of states and territories is further eroded, for example due to the GST-exempt status of items such as health expenditure.

If we look at the health services that are GST free (without considering medical services or medical aids), they include many things such as dental, nursing, psychology, pharmacy, optometry and social work. Considering the governments attempt at a medical levy in their as yet to be passed budget, and the wish for the states to run their own states, could this be their work around? We witnessed yesterday just how hard nosed this government can be with the introduction of the fuel excise despite it not passing Parliament and side stepping the Senate.

Apart from the fact that it’s lazy, the Australian people voted for the government to run our country not big business, the BCA, the IPA, Mr Murdoch or lobby groups. And the fact that Mr Abbott is asking for help from big business in persuading the ALP to “join Team Australia” is unsettling because it doesn’t resemble democracy in the slightest. If the broadening of the GST or increasing of it is remotely on the cards it needs to be brought to the people as well as big and “small” business. The budget situation needs mature discussion within the government itself to find solutions, not finding it’s saving measures through underhanded tactics.

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