Could a future federal government override the States on GST changes? > Check the facts

Who: “The GST cannot be changed without the agreement of all the states and territories.” Tony Abbott

“No federal government can change the GST without the consent of each state and territory.” The Australian

The claim: The Opposition denies it has any intention of either increasing the GST rate (currently 10 per cent) or extending its scope (for example to include food).  The Opposition has announced that it would hold a review of the taxation system if it wins government and the GST would be part of that review. However, the Opposition claims that even if it wanted to it could not increase the GST without agreement from the states and territories.

The facts: The Coalition had promised a ‘comprehensive White Paper on tax reform’ which includes the GST. The legislation creating the GST includes provisions for only making changes subject to the agreement of the states and territories. However, new legislation could repeal those provisions. For example amending and/or repealing the relevant parts of A New Tax System (Managing the GST Rate and Base) Act 1999 and A New Tax (Goods and Services Tax) Act 1999 would be necessary to change the rate of GST and broaden its scope.

The finding: Like any tax the GST could be changed without the agreement of the states and territories.

Discussion of evidence:  The GST was introduced under the Howard government. Food and educational materials were excluded. The Business Council of Australia has released an action plan that includes lowering business taxation and potentially financing lower business tax with a revisiting of the GST. Business interests have openly called for a widening and broadening of the GST.

The Coalition has said that if it wins the election any tax initiatives outlined in the proposed White Paper would be taken to a subsequent election. But at any time governments can change the GST legislatively. There may well be political challenges for a government wanting to change the GST, but if it can get legislation through Parliament it can make those changes.

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