The NSW Treasurer, Mike Baird, has joined the Premier, Barry O'Farrell, in calling for a debate about whether the rate of the GST should be increased in light of plummeting revenue to the states.
After a week in which Mr O'Farrell was criticised for cuts in education and health, which he said were needed because of falling GST revenue, yesterday he said ''everything should be on the table'' when examining alternative revenue sources.
''It's a lack of confidence at the national economic level that's caused the reduction in GST receipts, that's caused the flow-on consequences for the states,'' he said. ''I think we should have a discussion about whether getting rid of other state taxes can be exchanged for adjusting the GST in a way that seeks to address current problems that states are facing in revenue.''
The Prime Minister, Julia Gillard, ruled out increasing the GST, while the federal Treasurer, Wayne Swan, went on the attack.
''Mr O'Farrell's plan to increase the rate and scope of the GST is a blatant tax grab that would hurt millions of families across the country, including in NSW,'' Mr Swan said.
''While Mr O'Farrell's in the process of sacking thousands of workers, he also wants to hit them while they're down by jacking up the GST. No wonder Australians are getting very worried about what an Abbott-Liberal government would mean for their job security and household budgets.''
The Opposition Leader, Tony Abbott, said the Coalition had ''no plans to change the GST, none whatsoever''.
Mr Baird and the South Australian Treasurer, Jack Snelling, are preparing a plan for Mr Swan on how to abolish inefficient state taxes, such as stamp duty on housing. Mr Swan has ruled out increasing the rate of the GST, or broadening its base.
Mr Baird has called for consideration of whether the GST-free threshold for online purchases from overseas websites should be cut from $1000 to about $30, which would potentially raise hundreds of millions of dollars in extra GST revenue. This could pave the way for an abolition of stamp duty, or be used for infrastructure and services.
The idea was backed by most states but given a lukewarm reception by the federal government and opposition.
Yesterday Mr Baird said increasing the GST should be discussed at a meeting of state treasurers next month, before the report is given to Mr Swan in December. ''While our first consideration will be looking at the online GST threshold, the Premier has rightly articulated the financial challenges facing the states due to the huge collapse in revenue,'' he said.
''We should be looking at all alternative options and everything should be on the table.''
The NSW Opposition Leader, John Robertson, said Mr O'Farrell had campaigned on lowering the cost of living ''but now he is advocating for raising the GST, which will put pressure on every household budget in NSW''.
The NSW government has announced it will cut $1.7 billion from education and $775 million from health over the next four years.