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Senior Minister fuels GST debate

As senior frontbencher has joined the chorus of calls for a broader consumer tax.

Trade Minister Andrew Robb has supported an expansion of the goods and services tax (GST) to such things as fresh food and education, but repeated the party line that no change should be made before the next election.

Mr Robb told the Australian Financial Review on Friday he saw “general agreement” that a broader GST would be beneficial.

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He also criticised the singular focus on GST, arguing the tax system had to be looked at as a whole.

Liberal backbencher Dan Tehan reignited the GST debate last week, calling for the tax to be expanded to fresh fruit and vegetables, private school fees and health insurance.

“We should look at things like food, like health, like education and see whether it is better to apply the GST to those sectors of the economy like they do in New Zealand, where 96 per cent of what is consumed is captured by the GST,” Mr Tehan said.

The Opposition has sought to capitalise on cost of living fears by suggesting there is “orchestrated campaign” underway within the government to break its promise and push ahead with changes to the tax before the election.

Labor’s junior treasury spokesman, Andrew Leigh said Mr Robb was outing himself as the ring leader of the campaign within the government to change the GST.

“Australians now know the Liberal Party’s campaign to increase the GST goes right to the cabinet table,” he said in Canberra.

Government backbenchers Dean Smith and Ian Macdonald have also weighed in, advocating a broader GST.

Fresh food, health care, education expenses and overseas online purchases of less than $1000 are currently exempt from the 10 per cent impost.

Dr Leigh hinted that the opposition might consider lifting the exemption on overseas online purchases, a measure Labor considered while in government.

The government has insisted that it will abide by its pledge not to change the tax before the next election.

“No change to the base, no change to the rate of the GST, full stop, end of story,” acting treasurer Matthias Cormann told ABC radio on Thursday.

Senator Cormann did concede that the government was initiating a conversation with the nation about how the tax system could be improved.

Any GST change would need to have the support of the community, parliament and the states, Senator Cormann said.

Key research group The Australia Institute has supported the idea of widening the GST, estimating that only nine per cent of the additional revenue would be extracted from the poorest households.

A report by the Institute concluded that the budget has a revenue problem that additional GST revenue could solve.

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