Pressure applied on tax following Federal Government's $80 billion cut
Pressure applied on tax following Federal Government's $80 billion cut

State governments under pressure to find revenue

TREASURER Joe Hockey says he will waste no more effort arguing for a GST increase without support from the states.

The Treasurer used a speech in Melbourne on Wednesday to urge the states to find new ways to raise funds while cutting back on income and company taxes.

"There is a strong view that our corporate tax rate is uncompetitive and that our personal income tax rates are seeing some of our best and brightest move to lower taxed countries," he said. "On average, of all tax collected across the OECD, around 34% comes from personal and company taxes.

"In contrast, the Australian Government collects over 70% from those revenue sources - or 60% if you take into account state revenue."

Mr Hockey said the country risked losing its biggest players if it did not become competitive.

"We raise about $68 billion in company tax a year. Of this, 12 companies pay about a third," he said.

"This means that changes in company structures - or a sudden change in the business environment - can lead to dramatic changes in the revenue we receive from company tax."

Property taxes and broadening the GST base were put forward as sensible ways of increasing revenue, but Mr Hockey said other options must be considered.

"When it comes to the GST, let me be very clear: no change will be considered without the unanimous agreement of state and territory governments and bipartisan support in the Federal Parliament," he said.

"If the beneficiary of the reform doesn't want it ... it's effectively game over."

Property Council of Australia chief Ken Morrison backed the Treasurer's comments about stamp duty being an "inefficient" tax in desperate need of reform.

"Obviously the removal of stamp duty needs to occur in conjunction with a broader series of tax changes so that states and territories have the revenue they need to deliver services, and it is essential that GST reform is on the table," Mr Morrison said.

The states are under pressure to find revenue following the Abbott government decision to cut $80 billion in funding for schools and hospitals over a decade.