A few numbers show why our states are still fighting over their fair share of the goods and services tax.
I live in Sydney, but I was born and raised in Perth. So, when NSW and WA argue over the goods and services tax, with politicians calling each other names likeEvery year, the states fight over how much of GST revenue they should get. If not for a change in 2018, WA would be getting $1 billion, a 1.1 per cent slice, of the nearly $90 billion GST stash next year. NSW and Victoria, meanwhile, would be getting 29 per cent and nearly 27 per cent respectively, a combined $50 billion.
One glaring problem, however, as NSW and Queensland have discovered this year, is how wildly commodity prices can move. A jump in thermal coal prices over the past couple of years has left both states with smaller cuts of GST revenue in 2025, even though coal prices have cooled down. Why? Because they raked in a lot more in mining royalties, and are therefore considered less “in need” of GST revenue.
Economists Saul Eslake and Chris Richardson have another gripe with the 2018 changes. They say top-up payments from the federal government to the states, to fulfil a promise that no-one would be “worse off” from WA getting more GST revenue, will cost taxpayers roughly $50 billion over a decade.
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