GST Debate Rages On, Retailer Warns of "Negative Effects"

Written by Oonagh Reidy     21/05/2013 | 09:51 | Category: COMMENT

Exclusive: As the GST debate rages on, Betta CEO warns an increase could have a "negative effect on consumer confidence" if done in isolation.

GST Debate Rages On, Retailer Warns of

 
PM Julia Gillard has pledged not to touch GST rates in the future, while Liberal Leader Tony Abbott has said GST reform will be on the agenda if elected in September after consultations with the states, and would release a white paper examining the issue. 

"My personal view is that...an increase in GST, in isolation, would have a potential negative effect on consumer confidence," Betta CEO Graeme Cunningham told CN. 

"A tax on consumption is preferable to a tax on income and savings."   

However, "if the GST was increased to the level where Carbon tax, Mining tax and even payroll tax could be removed and personal tax rates reduced, jobs and growth would be more likely to improve," he said. 

The current GST rate of 10% has been unchanged for several years and is a broken system says Liberal NSW Premier Barry O'Farrell, an opinion backed by several current and former state premiers. 

O'Farrell warned the GST reform should look at "broadening the base, looking at the rate and also the rebates back to the states," he told Sky News.  

"People know the current tax system is failing ... regressive taxes that we can only eliminate if we are compensated for it and the best way to do that is through the GST."

Former NSW premier Nick Greiner has also backed a review of the GST system given the states current poor finances, and the WA premier has also given his backing. 

Shadow Treasurer Joe Hockey said it is up to the states to make a case for reform but says the Coalition will seek a mandate from the electorate, before changes are made, reports ABC.

The Australian Retailers Association have not yet made their position on the issue known, and will do so on Friday after the Council meets to finalise their position.

But the retail body is "not necessarily against it," ARA Executive Director Russell Zimmerman told CN. 

The government could look at broadening the base, he said, noting some retailers pay GST on goods while other retail sectors are exempt. 

"As an association we understand the need for tax reform," he said. 

However, ARA certainly has a bee in its bonnet about the lack of GST (threshold) reform on goods sold online (LVIT), which it wants lowered along with the government's move in the latest federal budget to increase the Import Processing Charge (IPC) from $102.60 to $152.60 per consignment from 1 Jan 2014, which Zimmerman says is "cynical." 

"The government is making it harder for retailers to process goods yet won't make a level playing field" when asked to reduce the threshold on goods sold online. 

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