GST Distribution System Under Review

Added by on March 31, 2011

The current goods and services tax (GST) distribution system is flawed and will be reviewed, says Prime Minister Julia Gillard.

The review will be conducted by former NSW premier Nick Greiner, former Victorian premier John Brumby and South Australian businessman Bruce Carter.

Ms Gillard told media on Wednesday that there is a need to improve simplicity, transparency and predictability in distributing GST to states and territories, and to create incentives for economic reform. “I want to get those things fixed, and this is the process to get them fixed,” she told reporters in Perth.

Gillard also added that states should not be penalised for success, in response to concerns raised by, among others, Queensland Premier Anna Bligh and WA Premier Colin Barnett.

“Over the past decade, states like Queensland and Western Australia have seen billions of dollars worth of GST revenue stripped away because of the superior performance of our economies,” said Queensland Treasurer Andrew Fraser .

Gillard responded by saying “We need a formula, a system that better copes with growth.”

However, Tasmanian Premier Lara Giddings said she feared the review could politicise tax distribution among states. “Tasmania is at a relative disadvantage both in terms of population size and socioeconomic status,” she said.