Renee Viellaris, 09 November 2015

FUEL excise and car registration fees could be dumped to compensate consumers for any GST rise.

The Turnbull Government is believed to be looking at dumping or remodelling a number of taxes, including fuel excise – and encouraging states to do the same – in a bid to increase the GST but decrease taxes paid overall.

Motorists are slugged with an excise on fuel plus GST. Increasing the GST could increase the cost of a family’s work, school and weekend driving dramatically.

Increasing the GST on fuel would also jack-up transport costs, which make food and services delivery more expensive.

In 2000, then prime minister John Howard reduced excise on fuel to offset the introduction of the GST. He also ended the twice-yearly CPI increase to the fuel excise. Tony Abbott brought it back last year during his time as leader.

However, it is understood the Federal Government believes states should dump car registration charges, which continue to increase and bite into budgets.

Treasurer Scott Morrison yesterday hinted states and territories may also have to open up their education and health services to the private sector in a bid to encourage more competition and value for money.

Speaking to Sky News’ Australian Agenda program yesterday, Mr Morrison said tax and competition reform needed to be linked.

“They’re inextricably linked because the Australian people, I don’t think, will cop any changes in the tax system just to give the states a bucket of money to spend it, as they are now,’’ Mr Morrison said.

“They would expect to see any changes to result in better services, more choices, better spending.

“Any change to the tax system needs to have in it the swings and roundabouts, which means that Australians are better off.

“You wouldn’t do this if Australians weren’t better off as a result of doing it. So he’s talking about it and I agree. We are a pragmatic government, which means we must engage with the states and territories to come up with a collaborative outcome.

“The Harper reforms and the Harper recommendations are all about liberating important areas of our economy at the micro level, at state and territory level.’’

The Harper review also recommended governments consider a cross-jurisdictional approach to road pricing, including introducing a user-pays system for the roads travelled on.

“Fuel excise and registration fees should be reduced as road pricing is introduced,’’ the report said.

Mr Morrison said the average wage earner would be in the second highest tax bracket in Australia next year.

“And that means that you need to apply your mind to what all the potential solutions are to ensure that you come up with a system that is going to support growth and jobs and the economy.

“I think one of the issues here is that income tax, personal income tax in particular, has become a silent tax in Australia,” he said.

“People are paying more and more income tax every single year because of the inflation tax that comes with bracket creep.’’

Extracted in full from the Courier Mail.