|The Australian Chamber of Commerce and Industry welcomes Treasurer Scott Morrison’s announcement of a Productivity Commission review into Australia’s system of horizontal fiscal equalisation.
The Australian Chamber’s Director of Economics and Industry Policy, Adam Carr, said:
“The GST is one of the most efficient taxes a government has at its disposal, in the sense that if it is implemented properly, it creates fewer distortions than other taxes might.
“The Productivity Commission is well placed to consider the economic impact of the GST’s distribution and we look forward to its recommendations.
“When the GST was introduced nearly 20 years ago, it became the main source of Federal Government funding given to the States.
“There is a lot of history packaged up in the distribution of the GST. The current funding formula is complicated – it aims to ensure states have the same capacity to deliver services, based on an average tax effort. It takes into account population characteristics and revenue sources.
“A number of concerns have been raised for some years now about how the GST is distributed among the states and we look forward to the Productivity Commission’s review.
“We support efforts to improve productivity, efficiency and economic growth through the distribution of the GST.”