Queensland Senator Ian Macdonald has called for an expansion of the GST to cover fresh food after the Coalition cut $80 billion from health and education funding in its budget released last week.
State premiers, who are responsible for schools and hospitals, have argued the cuts leave them with a funding black hole. This has led to speculation the GST could be increased or expanded.
Macdonald told Fairfax Media the tax should be broadened to include consumer items such as fresh food which were exempt under the original deal negotiated by former prime minister John Howard and the Democrats in 1999.
“I will never support an increase in the GST but I think we should extend it to what we originally proposed prior to the 1998 election,” he told Fairfax.
“I could also support states having a smidgen of income tax; if we want them to run schools and education, that seems fair.”
The views expressed publicly by Macdonald are reportedly echoed by many within the Coalition’s party room. Last year the Grattan Institute think tank estimated that slapping the GST on fresh food, health and education would raise an extra $15 billion for the states.
Any change to the GST would be incredibly unpopular. Two polls released after the budget already showed the Government had slumped on a two-party preferred basis, and that Opposition Leader Bill Shorten had overtaken Tony Abbott as preferred prime minister.
The broadening of the tax has been raised by Howard, the head of Treasury Martin Parkinson, former prime minister Malcolm Fraser and former Victorian premier Jeff Kennett. Senior Labor figure and former Victorian premier John Brumby has also said the government and states will need to discuss GST reform.
The Prime Minister said at the weekend there were no plans to change the GST.
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