Treasurers look to resolve GST anomalies

When the nation’s treasurers gather at the end of this week there are hopes they can resolve two anomalies of the GST that have been in place since its introduction.


One was never envisaged as being a problem when the consumption tax was introduced in 2000, while the other has treated half the nation unfairly just for being a woman.

Retailers will be hoping that Friday’s meeting in Canberra can move a step closer to creating a level playing field with the lowering or removal of the $1000 GST threshold on goods and services purchased overseas.

The threshold has put domestic “bricks and mortar” retailers at a disadvantage since the explosion of internet shopping.

Their own low-cost goods and services are subject to 10 per cent GST on everything aside from food, education, healthcare and financial services.

The cost of collecting the impost has been the stumbling block for reducing the overseas threshold in recent years.

But now federal Treasurer Joe Hockey believes he has found the solution as a result of consultations with the UK and several other jurisdictions.

He has indicated several times that he wants to reduce the threshold to zero, rather than just lowering it, so that everyone pays the same.

It will mean that consumers will stand less of a chance of picking up a GST-free bargain online.

Meanwhile, Australian women might at last have won the fight to remove the GST from sanitary products, with Labor state treasurers indicating their support for the move ahead of Friday’s meeting.

Mr Hockey is on the record saying the change would be made if there was unanimous agreement amongst the states.

The meeting will also discuss the progress of Mr Hockey’s white paper tax review.

Last month, at a special leaders retreat, Prime Minister Tony Abbott and premiers agreed to further consider an increase in the GST rate to 15 per cent from 10 per cent, or raise the Medicare levy, to fund the future health needs of the states and territories.

But Mr Hockey says simply increasing taxes is not tax reform.

“Long-term fiscal sustainability is critical for the states and we need to discuss the best tax mix for creating the revenue they need for the future,” he told AAP.

State and territory treasurers will fly to Canberra on Thursday for a dinner with Mr Hockey, before the meeting gets officially under way on Friday morning.