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Further implications
It seems highly unlikely that any attempt to extend the GST will be made prior to the next federal election. The Prime Minister, Tony Abbott, has publicly declared that this will not happen. Further, the proposal would currently be so politically unpopular that it would virtually guarantee that the Abbott government was voted out of power.
However, this clearly does not mean that an extension of the GST is not under consideration by the federal government and others. In its first budget, the Abbott government reduced funding to the states for education and health services by $80bn. This is obviously a major incentive for already cash-strapped state governments to consider how they might attract additional revenues.
In a speech given at the Sir Henry Parkes Commemorative Dinner on October 25, 2014, Tony Abbott asked, 'Might the states be prepared to accept responsibility for broadening the indirect tax base [the GST]; might they be prepared to surrender some of their responsibilities to the Commonwealth; might there be new funding formulas that wouldn't solve the blame game but could at least give it a new and more realistic starting point?' Under current circumstances, the answer to that question might ultimately be 'yes'.
West Australia, which currently receives some 44 cents in the dollar of GST revenue, has been pushing for some time for a larger allocation. The West Australian premier, Colin Barnett, supports an extension of the GST to include food.
In December, 2014, Mr Barnett stated, 'I think the exemptions for food really just unnecessarily complicate matters. They are not big ticket items like school fees or health expenses and the like. I don't think people would really notice it to any great extent.'
However, not all the other premiers share this view. The Victorian premier, Daniel Andrews, has declared his total opposition to an extension of the GST base or to an increase in the tax rate.
It requires the agreement of all the states and territories for a change to be made to the scope or rate of the GST. Currently, it does not seem likely that that will be achieved. However, there is still a long way to go.
The federal government has sanctioned a review of the taxation system which is due to be completed by the end of 2015. It is anticipated that its recommendations will include increasing the rate and broadening the base of the GST, and increasing taxes on superannuation. If, in the meantime, the federal government continues to reduce the funds available to the states, more of their leaders may be amenable to these changes.
None of the four members of the Coalition calling for a GST on fresh food is a voice crying in the wilderness. This is a discussion that the government wants to be had, well before it makes any concrete proposals.