Former Prime Minister John Howard has cautioned the Turnbull government against fighting shy of a hike in Goods and Services Tax. Howard, who is credited with introducing GST in Australia, said hiking GST is absolutely essential in slashing personal income tax and company taxes.
Howard’s comments came in the backdrop of Turnbull government’s outright rejection of any hike in the GST to 15 percent, saying it offers no economic growth. Howard introduced the GST in 2000 with the argument that it can bring down taxes and boost efficiency, reports News Corp.
“I believe that eventually we have to come back to reforming the mix between direct and indirect taxation in revenue neutral way. I don’t want to see the GST lifted in order to get extra revenue, I want to see it lifted or broadened to facilitate reductions in personal income tax or company tax’.
Howard agreed that an increase in the GST has been ‘snuffed out’ as the Turnbull government has ruled out any hike in its tax package.
Speaking on “Australian Agenda,” the former PM also urged the Turnbull government to be careful while treading into the realm of tax changes on property investors, reports Sky News.
His apparent reference was to Turnbull government’s plan to cap the amount people can set off against taxes from negative gearing on property income. Howard said far reaching changes could hurt many people with modest incomes as they are dependent on the tax concession. “Negative gearing has been around forever … I’d be careful”, he said.
Meanwhile, TheAustralian Financial Review reported the growing resistance of Coalition law makers against any hike in GST. Liberal Senator Cory Bernadi termed raising the GST as a “folly” while many Coalition Senators expressed their “concern” over a hike.
Nationals Senator Matt Canavan said the tax debate seems to be giving a hugely bright picture about the benefits of GST hike.
“People think that the GST is the Thermomix of Australian politics. It can bake, it can make soup, it can improve your love life, it can do all of those things, but it can’t. It will raise a finite amount of money,” he said.