Federal Opposition Leader Bill Shorten has reprimanded his New South Wales counterpart Luke Foley over favourable comments on an increased Goods and Services Tax (GST).
Mr Foley said he would consider supporting an increase in the tax, from 10 to 15 per cent, on the condition the funds were used for health and education.
He told Fairfax Media any increase should also include compensation for low-income earners.
A GST increase is one option being considered by state and territory governments as part of tax reform, with Mr Foley’s comments following discussions with Prime Minister Malcolm Turnbull late last year.
Leaders are facing a self-imposed March deadline for reform, but Mr Shorten said increasing the GST was “wrong”.
In a statement, he said that the states were desperate for more funds, but “jacking up the GST and the cost of living is not the answer”.
“It is wrong to make every family, many of whom are struggling to make ends meet, pay more for everything,” he said.
“What I’m worried about are the millions families who are already struggling to keep their heads above water … will have to pay for an increased GST on every single thing they buy.
“These families deserve a decent standard of living and that’s why I am absolutely opposed to the Liberals increasing the GST.”
Labor senator Doug Cameron also criticised Mr Foley’s comments, saying his views were “unacceptable”.
In a social media post, Senator Cameron said: “I never thought I would see the day when the NSW Labor leadership would capitulate to the neoliberal economic agenda that hits the poorest hardest.”
Mr Turnbull is yet to indicate his position on potential changes to the GST, but federal Treasurer Scott Morrison has confirmed he will consider giving a share of income tax to the states and territories in return for an increased tax rate.
Under the proposal, states would get a share of the $200 billion collected from income tax annually, while the Federal Government retained part of the proceeds of the GST.
South Australia’s Labor Premier Jay Weatherill suggested increasing the GST to help fund health care late last year.