A day after Prime Minister Malcolm Turnbull appeared retreating from a possible hike in Goods and Services Tax (GST), the Business Council of Australia has cautioned against any such step.
It warned that suppressing GST hike will be tantamount to quelling the hopes for cuts in personal income and corporate taxes. Voicing concerns, Business Council of Australia’s chief executive Jennifer Westacott said Prime Minister Malcolm Turnbull’s statement is not helpful, reports Sky News.
“If the GST is not part of a total tax package, the nation’s degrees of freedom to make a real impact on tax relief will be very limited,” Westacott wrote in The Australian Financial Review.
She said neither side of politics should have allowed GST to dominate the debate on tax reform. The Business Council head also warned against the “escalating scare campaign” against the hike in GST. She said the campaign looks like a ticking time bomb readying to “blow up” the actual content of the debate.
“I am concerned that tax reform runs the risk of being the latest victim of Australia’s dysfunctional political debate, and every single Australian will be the loser as living standards decline,” she wrote.
Meanwhile, Labor appeared unsure whether the government will finally dump the plan to raise GST, despite Turnbull’s doubts on it. Their skepticism has heightened after the comments of Treasurer Scott Morrison. He left the door ajar on the matter, reports Sky News.
“You just don’t write things off carelessly and politically,” Morrison told Sydney’s 2GB radio. The Treasurer said his intent was to deliver personal tax cuts with a planned hike in GST to 15 percent. “If that’s not possible by that method, we are just going to go the long road,” he said.
Morrison also denied suggestions that the government was trying to make changes in negative gearing. He said negative gearing will continue to be a real opportunity for middle-income-earning Australians. Negative gearing entails managing tax losses when the cost of owning a rental property exceeds the annual income from it. It is usually offset against other income streams like wage or salary to give tax relief. “They’re not the problem, but we need to look at all aspects of how the tax system works,” Morrison told reporters in Canberra.