Government plans a fairer way to share the GST

6/7/2018

THE federal government is delivering on its promise to fix problems within the system used to share GST revenue, which will leave all states and territories better off.

Federal Member for O’Connor Rick Wilson MP said this would be the first time real changes have been made to fix problems in the sharing of GST since the tax was introduced on July 1, 2000.

“Over the past 18 years, WA has lost billions of GST dollars to other states, simply because we’ve been one of the major contributors to the GST pool,” Mr Wilson said.

“Western Australians know that the system was not working and that volatility was undermining the ‘fair go’ objective of sharing GST between the states and ensuring everyone had access to essential services.

“The government has developed a plan that is a real, long-term solution, rather than a political quick fix.”

The proposal will involve transitioning to a new horizontal fiscal equalisation system over eight years from 2019-20 in a way that is fair, reasonable and sustainable and that will ensure all state and territories are left financially better off.

To assist with the transition to the new system, the Commonwealth would provide short-term funding over the three years from 2019-20 to 2021-22, ensuring no state receives less than 70 cents per person, per dollar of GST.

WA is expected to be the only state with relativity below 0.70 during this time.

“Importantly, this funding would be untied, meaning WA would be able to spend it as they see fit to deliver services such as schools, hospitals and infrastructure,” Mr Wilson said.

“This is a fair way of ensuring WA gets the services it needs.”

 “Western Australians should be congratulated for persisting with the case for reform.

“I am proud to be part of a government that has a plan to make the system fair and deliver more funding for essential services for all Australians.”

The next step is for the federal government to consult with states and territories on its proposal, with the aim is to deliver reform that is equitable and leaves all better off by the end of 2018.

 

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