The Great State Take debate

GST, or the Goods and Services Tax was initiated at thestart of the millennia and works by putting away a little snippet of ourspending in a year, to form a savings fund of sorts for each state. At the endof each financial year, the piggy banks are emptied, counted then returned tothe state as extra pocket money - well that is the theory. Since the miningboom, our lovely state has been getting royally shafted when it comes to theGST fork out each year. So it comes as no surprise, when the GST return rateswe listed recently, WA was given a supporting role. It seems this tax is bestfor everyone unless you’re out West.

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What we get vs what we provide

In 2000, the broad-based tax system began taking 10% eachand every time we spent money on most goods, services and additional itemspurchased across Australia. Whilst the tax system has its perks, for exampleeliminating the headache of tipping when you’re trying to survive a food coma(take note America), the repayment distribution to each state has been heavilycriticised.  The revenue generatedstate-wise each financial year is returned on a per-capita basis, or it’ssupposed to be – if only Western Australia was so lucky. 

What you earn (or save) is what you should get back, howeverfor some states earning above the normal rate, this means giving up some of thehard spent cash-money to help out lower earners . Whilst most other statesreceive fairly close to a $1 for $1 return on their GST, WA rarely sees morethan 30c on the dollar calling for yet another inquiry into why WA is stillsuffering a historic low in GST returns. Meanwhile the Northern territory seesa return of $4.66 on every dollar - seems to bring in a tidy profit. So if youwere wondering wherel your tax goes…. it’s with our northern neighbour.

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Being high earning doesn’t always pay off

The report released by the Commonwealth Grants Commissionstated WA possessed the strongest fiscal capacity in the nation. Despite aprevious GST estimate of 38c, the released distribution has been a little lowerthan expected, four cents lower to be precise. Whilst it doesn’t seem like agreat deal, the drop means a $240 million loss to the state.  WA is in its fourth year of domesticrecession with the worst performing economy in the country, a fact pointed outrecently by the new WA treasurer Ben Wyatt. With layoffs, shutdowns and a toughjob market, it doesn’t feel like WA is very “fiscally strong”.

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Call for reform

Our calls for reform have not fallen on deaf ears as itappears the Federal Government has finally taken notice, ordering anindependent inquiry into the system’s distribution methods. However, just24-hours after the announcement the other smaller state’s piped up about havingtheir bankroll taken away.

Recent estimates offer a more favourable return to WA by theyear 2020, which by then the mining industry will have been well and trulydried up leaving the rest of the country to support us for a few years (abittersweet victory of sorts).