Debate: Pros and cons of raising the GST
INDUSTRY groups are backing New South Wales Premier Mike Baird's plan to raise the GST rate to 15%, while Labor and unions remain steadfastly against the move.
The Property Council of Australia has urged Prime Minister Tony Abbott and the first ministers of each state and territory to use Wednesday's leaders' summit to seriously consider GST reform.
"We can both grow the economy and raise more revenue if we rely on a better mix of taxes than what we have today," Property Council chief executive Ken Morrison said.
"That means being bold enough to embrace GST reform to abolish a range of inefficient state taxes.
"Stamp duty is not just a big cost to homebuyers, it is also a handbrake on economic activity which impacts the whole community."
But Federal Opposition Leader Bill Shorten says Labor will oppose any moves to increase the GST.
"It seems to me that the government's had a sneaky strategy, Mr Abbott's had a sneaky strategy where he will cut the funding to hospitals and schools and he's effectively taken state premiers hostage..." he said.
"What we need to do is to make sure that government isn't putting greater pressure on the household budget.
"They should be helping them, not starving household budgets with an increased tax.
"NATSEM, the independent economic research organisation, has said that increasing the GST as Mr Abbott's Liberals want to do, will cost ordinary households $3000 a year."
Unions NSW secretary Mark Lyons said Mr Baird's proposal for households earning less than $100,000 to be compensated for the tax hike "failed the sniff test".
"Taking money out of someone's pocket to allegedly redistribute it to them later is an economist's nightmare," he said.
"If Mr Baird thinks extra tax is the answer, and he really wants to target the wealthy alone, then why not just target them in the first place?
"Why ask Canberra to strip money from ordinary NSW families first and then claim to redistribute after the event?"