I am not a fan of the GST. I consider it an anti-federalist tax. I would accept it if it was funding the federal government, but since it is redistributed to the states, and not one for one, it breaks the principle of a government only raising the revenue it needs to support itself and nothing more.
Guy Barnett has a speech in the Senate Hansard on Commonwealth Grants Commission Report on state revenue sharing relativities. The language from the government is that the GST is a windfall - suggesting it comes at no cost, and Barnett, as Costello has, suggests that the states should cut their payroll taxes amongst others due to the GST windfall.
I would argue the opposite. Payroll tax, business taxes etc are some of the few means of taxation the states have direct control over. I am not suprised that they guard them jealously, considering as last time they challenged the federal government (NSW did) on excise taxes the High Court came down on the states declaring that an excise was anything short of a sales tax, and consequently the feds had authority over any excise. It should be noted that the dictionary definition of excise is a tax on local production. Which the High Court ignored.
The GST has also been an expansive federal tax, as Barnett notes:
In terms of the ongoing windfall gain, I want to make it clear that the GST windfall from 2003 to 2011 is humungous in size. In 2003-04 it was a $69.5 million windfall gain; in 2004-05, $106.1 million; in 2005-06, $102.2 million; in 2006-07, $109 million; in 2007-08, $117 million - as I have just indicated; in 2008-09, $131 million; in 2009-10, $140 million; increasing to a $152 million windfall gain in 2010-11. They are very significant numbers. So during that time the estimated GST windfall gain to the Tasmanian government is $927 million more than it would have received under the old tax systemWhich sounds to me like Tasmanians are over-taxed by the federal government with GST. If sales tax was leveraged at the state level, the states would be able to move the percentage of sales tax up and down according to their needs and the local economy. With an anti-federalist national tax, there is no refinement, and instead is just a whopping great coarse tax which envelopes both the Western Australian and Northern Territory economies in with the NSW and Victorian ones. Barnett speaks:
The state government payroll tax is a tax on jobs. This is a particularly iniquitous tax. Tasmania has been benefiting from that tax significantly. That revenue increase in the 2003-04 year to the 2006-07 year was 34.6 per cent. So they should use the GST windfall to start phasing out this anti-jobs tax, in my view. This report makes it clear that the rivers of gold are flowing deep and fast into Tasmania with GST dollars. It is up to the state government to use those dollars wisely.Alternatively, the federal government could reduce the GST rate since it is obviously overtaxing and supplying the state governments with more funding than they need.
