Abbott government links payroll tax to debate about tax reform Josh Frydenberg wants the states and business to get on board any proposal to increase the GST. A junior Abbott government minister has linked payroll tax to the broader discussion about the GST and the need for national tax reform, saying he has never thought payroll tax is a "good or efficient tax." Josh Frydenberg, who is parliamentary secretary to Prime Minister Tony Abbott, also says state governments are the ones which are going to have to "make the case" for any increase in the GST because they will be the ones getting the money. "If there was to be any increase [in the GST] the case would have to be made by the states, they would all have to support it because ultimately they are the beneficiaries of an increase in the GST," Mr Frydenberg told Sky News on Sunday. You would also need the advocacy of key groups like the Business Council of Australia because the public aren't going to take the politicians' words for it. They've got to make a good case for it. They've got to be advocates for it. Mr Frydenberg also linked payroll tax to the debate about tax reform, saying Prime Minister Tony Abbott would like to consider every option for reform when simplifying the tax system. We need to look at what are superfluous taxes, what are disincentives to employment, for example payroll tax. I've never thought that that is a good or efficient tax," Mr Frydenberg said. But we need a broad-based discussion and I think the Prime Minister has said let's put all those issues on the table, let's get the experts to look at it, let's do a white paper on tax reform, at the same time do a white paper on federalism and see where those two reviews intersect. Former Treasury official Chris Richardson, who is director of Deloitte Access Economics, said last week in Canberra that Australia ought to rethink its income tax regime. "If you compare it to other nations our tax burden falls more heavily on income taxes and less heavily on taxes on spending, so we're actively discouraging work and innovation," he said. Mr Abbott called for a "mature" debate last month on tax reform and Commonwealth-state relations, including the way in which different levels of government collect and distribute taxes. But shadow assistant treasurer Andrew Leigh said on Sunday that Labor did not support any increase in the GST because it is a regressive tax. He said low-income households would have to be compensated if the GST was raised and the Abbott government could not be trusted to provide that compensation. According to John Daley from the Grattan Institute, if the GST is raised from 10 per cent to 12.5 per cent, it would help to boost government revenue by about $14 billion a year, after $2 billion was returned to low-income households to compensate them. The GST covers only about 60 per cent of a comprehensive consumption tax base, giving Australia the seventh-lowest "coverage ratio" among 32 OECD countries. On Sunday Opposition Leader Bill Shorten suggested the government was more interested in raising the rate of the GST than cracking down on tax avoidance by multinational companies. Nearly 28,000 pages of leaked documents from Luxembourg were published on Thursday in global media, revealing how 343 Australian and foreign companies have used tax havens in recent years to dramatically cut their tax bills. In September, Treasurer Joe Hockey urged the tax commissioner to "double his efforts" in cracking down on tax avoidance by multinationals, and has since put the issue of multinational profit-shifting high on the G20 agenda. But Mr Shorten questioned Mr Hockey's commitment to cracking down on profit shifting on Sunday. "It is wrong in Australia that a high-street newsagency can pay more tax than Google or Glencore in Australia," he said. One, he proposed to put on a tax on going to the doctor. Two, he is proposing to make it more expensive to get a higher education in Australia. Three, he has cut back the Australian Tax Office efforts to collect taxation from multinationals. So this is a bloke who loves to say one thing but when it comes to actually doing what he says you get a different prescription altogether...they [the Coalition] would rather increase the GST by blackmailing the states and cutting their funding, than they would chase multinationals for taxation earned in Australia.