GST hikes: who wins, who loses

NEVILLE,

Treasurer Joe Hockey is pushing for tax reform that hits those who can least afford it the hardest – and he’s getting your state premier to do his dirty work.

The Abbott government’s $80 billion in budget cuts to public schools and hospitals have thrown the long-term funding model for these essential services into turmoil. State premiers are searching frantically for solutions to offset an enormous funding shortfall.

This week, NSW Premier Mike Baird has been spearheading a push for a GST hike. VIC Premier Daniel Andrews is instead proposing an increase in the Medicare levy. But a genuine national conversation about tax reform is futile with the Abbott government categorically ruling out the big-ticket federal reform options – including superannuation, the capital gains tax discount and negative gearing.

As states and territories meet with the Prime Minister for a Leader’s Retreat today and tomorrow, they’ve an opportunity to band together to force better, fairer options for revenue reform onto Mr Hockey’s table.

At the beginning of this year, GetUp members chipped in to fund an ambitious report, which modelled eight new revenue-generating policy proposals. Canberra insiders told us the report went viral in the halls of Federal Parliament – forwarded from office to office, MP to MP. Now, we can do it again: this is a perfect moment to get fair ideas about revenue reform into the offices of our state leaders, right as they meet to discuss funding for our schools and hospitals.

Click here to send the ‘Brighter Budget’ report to your state premier’s office now – and ask them to use this week’s Leaders Retreat to put fair tax reform back on Mr Hockey’s agenda.

Last week, Treasurer Hockey told states to take “responsibility for their own budgets”.¹ It’s not hard to see why the states are aghast: none of them can afford to pay for the health system we have currently, let alone that of the future. Healthcare now eats up about 25% of state budgets, and costs are growing as medical services become more expensive and our population continues to age. Likewise, state government spending on schools is forecast to rise faster than GDP in years to come.²

Even Liberal state leaders must recognise that the Commonwealth has a role to play in raising more revenue to fund ballooning health and education costs.

In April, SA Premier Jay Weatherill spoke out about the need to broaden the reform debate: “There are other taxes that can be looked at before increasing the GST; they’re things like removing the generous superannuation concessions for high-income earners”.³ This is precisely the type of fair revenue solutions that we can get behind.

If our state premiers band together, they could become a powerful collective force for genuine tax reform at a federal level – and shift the tax debate beyond a narrow focus on regressive GST hikes.

Click here to ask your premier to stand up to the Abbott Government and put important reforms back on the agenda – including superannuation, the capital gains tax discount, negative gearing and closing loopholes for the 1%.

There’s now widespread dismay among both economic commentators and the business community about the Abbott government’s paralysis on tax reform. According to John Hewson, former Liberal leader and economist, the economic mismanagement of this period in time will be felt seriously in years to come.⁴

Can we afford to wait for the beds to start disappearing in our hospitals, or our kids to start falling through the cracks in our education system, to have a real conversation about Australia’s future?

A suite of new revenue ideas brought to the table at this week’s Leaders Retreat could help fund health services to underpin the wellbeing of our communities, and better education so that our children are able to fulfil their ultimate potential.

Thanks for being a part of it,
Nat, Daney and Alycia, for the GetUp team

PS – There’s been lots of chat this week about the GST, so let’s get one thing clear: GST hikes are not the best or most equitable way to increase revenue. Because the GST taxes everyone at the same rate regardless of income, it hits low income households the hardest – making our tax system less fair and increasing inequality. With economic mismanagement rife at the federal level, our state premiers could embrace their collective power and demonstrate some genuine political leadership to tackle reform. Will you write to your state premier now? https://www.getup.org.au/leaders-retreat

References
[1] ‘Raise the GST and fund yourselves, Treasurer Joe Hockey to tell states’, Australian Financial Review, 14 July 2015.
[2] ‘The government’s $14.2 billion budget fantasy to sell an election’, The Saturday Paper, 11 July 2015.
[3] ‘GST debate: SA Premier Jay Weatherill warns of state taxes, condemns WA as selfish on carve-up’, ABC News, 14 April 2015.
[4] ‘The government’s $14.2 billion budget fantasy to sell an election’, The Saturday Paper, 11 July 2015.