Accountants lament piecemeal approach to GST changes

Yesterday, Treasurer Scott Morrison outlined major changes to GST distribution among the states, including a government-funded top-up.

Planned to launch in 2019-20, the proposal will see the federal government top up more than $7 billion over the next 10 years in a bid to prevent states with smaller economies from falling behind.

“We’re putting in a safety net of a floor so no state [like Western Australia] can receive ultimately less than 75 cents in the dollar and we think that’s fair,” Mr Morrison said.

Speaking to Public Accountant, Moroney & Associates director Mitchell Moroney said that he can see the benefits of the changes living in Western Australia, noting it expected around 38 cents back for every dollar of GST raised in the state in 2017-18.

However, he was concerned where the money would come from if the government was set on bringing Western Australia to the 75 cents minimum return per GST dollar paid.

“If you isolate WA solely, it's going to be great for the economy. It's going to create new business opportunities because the state government will no doubt be spending more on infrastructure,” Mr Moroney said.

“But from a national point of view, you'd have to weigh it up, because you don't want to be effectively robbing Peter to pay Paul effectively – having one state suffer to prop up the other states.”

Change Accountants & Advisors director and CEO Timothy Munro told Public Accountant that while he’s totally for making things fairer, he says “it’s ridiculous to call it tax reform”.

“Reform of GST is majorly needed in the country but neither of the major parties will do it because neither has been able to properly explain to the public the benefits of it,” Mr Munro said.

“They definitely need to take the GST up to 15 to 20 per cent and reduce any other forms of indirect tax. That's proper tax reform, but just looking at how the states get a split is not tax reform.

“The thing that's going to help the small business client undoubtedly is removal of red tape from running a business.

“If a government decides to remove red tape, they remove some of the payroll tax, or business registration costs, or whatever it might be, then yes, small businesses will benefit.”