GST reform in tax white paper can be done without states OK

Friday, 27 March 2015  Media Alerts
The publication of next week’s Taxation White Paper is set to renew calls for the federal government to change GST to shore up state tax revenues.

Some of the States of Australia and the Prime Minister argue that change is not possible without unanimous state and federal agreement.

However a senior academic from UNSW Business School said that change to the base of the GST, or changing the 10% rate, can happen if the Federal Government is determined to push it through.

Dale Boccabella, an Associate Professor of Taxation Law says, “although successful as a political lock-in mechanism, the GST lock-in mechanism contained in Federal legislation is legally unenforceable."

He says this is despite the fact the GST revenue collected is distributed to the States. He says the reason is, “it is the legislative power of the Commonwealth that is relevant when determining whether the GST rate and base can be modified. The attempt to 'outsource' the legislative power of the Federal Parliament to the States through the so-called lock-in mechanism is constitutionally invalid."

Liberal backbenchers have called for a big shift in taxation policy, ahead of the government’s white paper on taxation, due out next week.

He says “overall, neither the GST legislation nor the Intergovernmental Agreement between the Federal and State governments would legally prevent the Commonwealth government from changing the GST rate or base without States' approval. However, this does not mean that the Commonwealth government won’t seek the approval of the States before making any such changes.”

For comment please contact 
Dale Boccabella on 02 9385 3365 or 02 9874 2539 or 

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