The federal government is adamant that changes to the GST are not its agenda, but tax experts say it must at least be discussed.
The federal government has distanced itself from Martin Parkinson’s call to raise or broaden the GST but tax experts say it would be a wise discussion to have.
The Treasury boss has warned Australia may have to increase indirect taxes such as the GST to have a sustainable budget and maintain growth in living standards.
He told a conference in Sydney on Wednesday the relative share of total indirect taxes continues in a long-term decline.
“Contributing to this decline is the non-indexation of fuel excise and a rising proportion outside the GST net, for example, increased health expenditure,” he said.
“It is hard to argue that this is either desirable or sustainable.”
A spokeswoman for Joe Hockey said while the treasurer was aware of the broad content of Dr Parkinson’s speech, he didn’t approve it.
“The views are Dr Parkinson’s own,” she told AAP on Thursday.
Foreign Minister Julie Bishop was adamant GST changes were not on the agenda.
“We’re not changing the GST,” Ms Bishop told ABC Radio on Thursday.
The government has pledged to take any new proposals to change taxes to the next election.
Parliamentary Secretary to the Prime Minister Josh Frydenberg said the government’s focus was on streamlining taxes.
But Tax Institute’s senior tax counsel, Robert Jeremenko, said Dr Parkinson has made it clear that significant tax reform, including the GST, is crucial to sustain Australia’s spending commitments over the decades ahead.
BDO national tax director Lance Cunningham agreed tax reform must be holistic, “not merely tinkering around the edges”.
Australian Council of Social Service chief executive Cassandra Goldie said the Treasury secretary made it clear that revenue is the biggest challenge, but this would not be resolved by a “narrow and divisive” debate over the GST.
Shadow treasurer Chris Bowen said Labor was up for a debate on tax reform but it doesn’t support increasing the GST or increasing petrol excise.
“Increasing the GST and its impact on lower and middle income earners would lead us not to support that policy,” he told reporters in Sydney.
He wasn’t given the same advice about changing the GST when he was treasurer last year.
While Australian Greens leader Christine Milne agreed with Dr Parkinson on the need for revenue to be raised to pay for important programs, she said it wasn’t fair the poor would be taxed the same level as the rich.
Federal MP Clive Palmer said raising the GST would weaken the economy and suggested Dr Parkinson didn’t fully understand the problem.
“I don’t think the guy who provided the advice has ever started a business … or employed people, so I don’t think he would really know,” he told ABC television.