Australian GST: 15 years on and still not 15 percent
I wouldn’t say I had misty eyes on Tuesday night last week but it was certainly with some nostalgia that I posted on LinkedIn: “Today marks 15 years since the introduction of GST in Australia…where has the time gone?” I nearly wrote “15 years, 15%?” but thought that might be too controversial. So instead I paused to reflect on where I was 15 years ago, who was with me back then and where those people are today.
For most people 1 July 2000 probably wasn’t a significant date, but for me as a GST practitioner, I look back on it with mixed emotions and ask:
- Has GST delivered what we thought it would?
- Have we allowed it to? Is our GST system still world-class or do we need to invest in it to bring it up to date with the 21st century and beyond?
- And most importantly, are we going to have a real chance to achieve tax reform by including a robust and fulsome debate about GST?
Back in 2000, younger and a bit more idealistic, I genuinely believed that Australia had delivered a GST system that would be more future-proof than others that had gone before it. I thought (possibly naively) that, like New Zealand, the initial GST rate of 10 percent would in time be raised, maybe to 15 percent, in line with global trends. I believed that the States would make good on their promises to remove “State Taxes” to allow for a more efficient and competitive economy to do business in.
But today the rate remains at 10 percent. The scars of political concessions at the time of GST introduction remain in the form of inefficient exemptions. Our system is no more future proof than others that went before us and the necessary political will to change it doesn’t seem to exist. I still have to explain to clients that in addition to the GST there are a number of other taxes they need to consider at a State and Territory level when doing business in Australia. In short, our system receives a pass mark but there is plenty of room for improvement.
What is clear to me through my nostalgia, is that we owe it to our children and future generations to use the opportunity now before us to discuss tax reform to ensure Australia is building a roadmap for prosperity. We must ensure that the debate about tax reform includes an open and honest consideration of the role of the GST, without political interference or agenda.
Upon reflection though, the main thing I remember from that night in July 2000 was the complete lack of taxis in Melbourne, which was due to a combination of taxi drivers being required to register for GST and the requirement to take taxis off the road so the meters could be adjusted to cope with the new GST system. So, it seems somewhat ironic that one of the current debates is the GST treatment of peer to peer ride sharing services such as Uber. I can’t help but wonder if ride sharing was around 15 years ago, maybe I wouldn’t have had so much trouble getting home that night?