This submission to the GST Distribution Review, being undertaken by the Treasury, responds to the review panel’s first and second interim reports.
Improving the GST distribution is important to enable states to deliver efficient services, ensure there are no barriers to national tax reform and facilitate the investment required to manage rapid growth as a result of structural changes in the economy.
The review panel should chart a path for moving to an equal per capita distribution of the GST over the long term. This should ensure that smaller jurisdictions are able to plan for, and manage, such a transition.
The Commonwealth Government will need to play a part in assisting recipient states to make the necessary adjustments, whichever transition path is pursued.
The fiscal imbalance is set to become even more acute in the future and at some stage the structure of state tax systems will need to be reformed.
The process needs to be cooperative in order to reap the maximum benefits.