Coalition feathers fly on GST

DIVISIONS have emerged between two of the Coalition’s leading agricultural voices over potentially removing an exemption on fresh food in the Goods and Services Tax (GST).

The idea was raised last week by Coalition agricultural backbench committee chair Dan Tehan who said considering the removal of such exemptions is essential to a “mature” and “proper” national debate on taxation reforms.

But NSW Liberal Senator and Junee farmer Bill Heffernan said dealing with taxation revenue leakage caused by the recent escalation of increased online buying is a more urgent and greater national priority than a 10 per cent GST on fresh food.

Mr Tehan ventilated the possibility of a GST on fresh food products in a new push to broaden the controversial tax, amid the government’s tight fiscal climate.

In a strongly worded Australian Financial Review opinion article, Mr Tehan said broadening the GST would deliver up to $21.6 billion in extra revenue each year and enable further serious reductions in direct taxes.

He said New Zealand’s GST covers 96pc of the neighbouring country’s consumption but in contrast Australia’s GST covered only 47pc of local consumption and was “shrinking”, having dropped from 53pc a decade ago
 

“While OECD (Organisation for Economic Co-operation and Development) countries have applied their valued-added taxes more broadly, Australia has an aversion to broadening this taboo tax, either due to flawed arguments of unfairness or political cowardice,” he wrote.

“Tax reform, particularly broadening the GST, is not the easy path.

“But it is the right one for our future.

“We must finish the job of tax reform begun last century by doing it well.”

Speaking to Fairfax Media, Mr Tehan said the Coalition was conducting a GST white paper process this year with tax reform “a priority agenda item for the government”.

“If our tax system is to remain efficient and internationally competitive, then we have to reduce our reliance on direct taxes, such as income and company tax, and look to replace that with indirect taxes such as the GST,” he said.