The final report to the Government of the GST Distribution Review Panel was released publicly by the Treasurer on Fri 30.11.2012.
The Treasurer will discuss the Panel’s recommendations with State and Territory Treasurers at the Standing Council on Federal Financial Relations meeting on 17 December 2012, prior to announcing the Commonwealth’s position once the Government has given thorough consideration to the issues addressed by the Report.
The Panel found that the current impasse between the Commonwealth and the States on the issue of the interaction between States’ mineral royalties and the Commonwealth’s resource taxes was “harmful and unsustainable, but that it won’t be fixed by penalising States through the GST distribution system”. The Panel concluded that what is needed is for the States and the Commonwealth to settle a negotiated outcome.
The Panel also recommended that the low value import threshold for GST be lowered to prevent the ongoing erosion of the GST pool. Initially, the recommendation said the threshold should be lowered so that it does not exceed $500 and this should occur “as soon as practicable”.
On tax reform, the Panel emphasised that a more broadly-based tax system was vital to Australia’s future prosperity, but noted that equalisation was not an impediment, nor was it an appropriate tool to compel or encourage States to change their tax policies.
Source: Treasurer’s media release No 119, 30 November 2012
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