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GST and federal financial relations

Comments on Alan Kohler “Rudd's tax Trojan Horse”, 20/04/2010, http://www.businessspectator.com.au/bs.nsf/Article/COAG-Kevin-Rudd-GST-health-reform-economy-pd20100420-4NSGE?OpenDocument&src=sph

Alan, with due respect, I find your view on the GST for States is problematic and conceptually flawed.

In Australia, there is vertical fiscal imbalance: States have more services responsibilities and too little own revenue raising capacities and in the end there are fiscal transfers from the Commonwealth to the States. GST is now part of that fiscal transfer.

To say that giving the GST to States was a mistake reflects a lack of understanding of the federal financial relations and what a properly functioning federation should be financially.

If the States have failed in some service areas, then the correct question should be how to improve State governance to make State governments more accountable, as opposed to continue the path of vertical fiscal imbalance.

By the way, who can be sure that the federal government will be able to provide better services, if the recent wasteful spending and financial rorts, which resulted in the ineffectiveness of federal government programs, are a guide?

Further centralisation is not the way to go for Australia. Your argument is highly misguided, unfortunately.

Your argument would be correct if and only if from a very narrow point of view of the “them versus us” selfish federal political approach.

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