Kevin Rudd's promise to keep GST rate may possibly be ruled out?

Mr Ken Morrison, the NSW head of the Property Council of Australia said “abolition of stamp duty should be a primary objective of the root-and-branch tax review” (ie, aka “Tax & Transfer Review”).  This is following the release of the Treasury’s discussion paper that stamp duties were inefficient and discouraged turnover in property markets.

The NSW State Government is backing up on the Federal Government’s idea of abolishing stamp duties as long as it is justly compensated by increasing the GST by a quarter to 12.5 percent.

However, the Prime Minister did say in March 2008:

“Over my dead body would there ever be any increase in the level of the GST”.

Some suggested that compensation for abolishing stamp duties doesn’t have to come from increasing the GST.

Mr Morrison’s view that there’s no revenue shortage in Australia but a reallocation of revenues and responsibilities is what’s needed.

It is too early to say, but it should be interesting to see whether the government will reconsider its stance on the GST-increase rule out. To us, there seems little chance of a “root-and-branch” change in the tax system without increasing the GST rate.