Political consequences John Howard had said that "GST would never become part of Liberal Party policy", but his change of heart would become apparent in the lead-up to the 1998 campaign. It was passed by the Senate in June 1999 in a heavily amended form. The Leader of the Democrats,
Meg Lees, viewed the dilution of the GST legislation as a success, but the issue split the Democrats, with Senators
Natasha Stott Despoja and
Andrew Bartlett voting against GST. The move triggered infighting amongst the Democrats, and while the Democrats performed reasonably well in the
2001 federal election when Stott Despoja was party leader, the infighting worsened, resulting in Stott Despoja being forced out of the leadership and the loss, at the
2004 federal election, of the balance of power they once held in the Senate. The annihilation of the Democrats was completed at the following election in 2007 when they lost all their remaining seats, with the
Australian Greens becoming the major third party. Australian Labor Party leader
Kim Beazley continued to oppose it during the Howard government's second term. During the
2001 election campaign, Labor made a 'GST rollback' a centrepiece of its election platform. Labor attempted to reprise the effects of the birthday cake interview by deriding the application of GST to cooked and uncooked chickens, but failed to ignite public response to the limited scope of the rollbacks applying only to gas and electricity bills. Labor lost the election, and though the
September 11 attacks and the so-called
Tampa affair dominated the campaign, the loss would effectively end all serious opposition to GST. In early 2006, the
New South Wales State Government and the Federal Treasurer
Peter Costello launched adversarial advertising campaigns concerning distribution of GST revenues to the states. New South Wales treasurer
Michael Costa argued in full-page newspaper advertisements and on televised commercials that New South Wales consumers paid A$13 billion in GST but received only A$10 billion back from the Commonwealth Grants Commission, and therefore New South Wales was subsidising resource rich states like
Queensland and
Western Australia. A bill was introduced that gave the federal government no obligation to hand back revenue earned by that state to be divided to other non-performing states. Unlike GST, sales tax revenue went back to the State that generated the sales tax. The federal government counteracted with its own advertising campaign which claimed that New South Wales had breached its contractual obligations under the 1999 GST Agreement by continuing to charge unfair stamp duties and land taxes, which were supposed to have been abolished. After weeks of intense media and public pressure, the
New South Wales State Government announced in its budget that it would reduce stamp duty and land tax, but critics argued that the State Government did not go far enough with much broader tax reform in New South Wales required to help encourage investment and business that had been forced elsewhere due to an unfavourable New South Wales business environment. This was in response to the Commonwealth allowing another A$72 million in grants to New South Wales, in addition to existing annual increases. In 2015,
Mike Baird, Liberal
premier of New South Wales at the time, supported calls for increasing the GST to 15%. In 2016
Jay Weatherill, Labor
Premier of South Australia, supported calls for increasing GST to 15%.
Economic and social effects Critics have argued that the GST is a
regressive tax, which has a more pronounced effect on lower income earners, meaning that the tax consumes a higher proportion of their income, compared to those earning large incomes. However, due to the corresponding reductions in personal income taxes, state banking taxes, federal wholesale taxes and some fuel taxes that were implemented when the GST was introduced, former
treasurer Peter Costello claimed that people were effectively paying no extra tax. Others also point out that the more important question to ask is not whether GST is regressive, but whether GST is more regressive than the alternative indirect taxes, namely, sales, excise and turnover tax (not income tax because that is a direct tax). In addition, they argue that what affects poverty and fairness is not the burden of any particular tax, but the burden of the tax structure as a whole, and how tax revenues are redistributed. When GST is combined with
progressive taxes, and the revenues distributed to the poor, the total fiscal structure can be progressive. The preceding months before the GST became active saw a spike in consumption as consumers rushed to purchase goods that they perceived would be substantially more expensive with the GST. Once the tax came into effect, consumer consumption and economic growth declined such that by the first fiscal quarter of 2001, the Australian economy recorded negative economic growth for the first time in more than 10 years. Consumption soon returned to normal however. The Government was criticised by small business owners over the increased administrative responsibilities of submitting
Business Activity Statements (BAS) on a quarterly basis to the
Australian Taxation Office. A study commissioned by the
Curtin University of Technology,
Perth in 2000 argued that the introduction of the GST would negatively affect the real estate market as it would add up to 8 percent to the cost of new homes and reduce demand by about 12 percent. The real estate market returned to boom between 2002 and 2004 where property prices and demand increased dramatically, particularly in
Sydney and
Melbourne. During the 2004–06 period Perth also witnessed a sharp climb in real estate prices and demand.
Tourist refund scheme Before the introduction of the GST, goods could be purchased from suppliers offering duty-free pricing upon presentation of a current passport and airline tickets. The goods would then remain sealed until the passenger had passed through the customs area at an airport. Following the introduction of the GST, a receipt for goods with a combined total over A$300 is eligible for a refund of any GST paid upon exiting the country with refunds claimed at a TRS (Tourist Refund Scheme) counter at the airport. The advantage of this arrangement is that goods purchased 60 days prior to departure may be freely used within Australia prior departure as long as they are carried in hand luggage and presented when making a refund claim, or shown to customs officials before being checked in as baggage. This does not extend to consumable goods such as food and beverages, or any services such as plane tickets or hotel room charges. To claim the Tourist Refund Scheme you have to follow the given rules: • You have to spend $300 or more including the GST on a single platform. You are allowed to combine all the invoices from the same retailer • The goods that you bought must be available in your baggage or carry-on so they can be checked • The original tax invoice of the good must be available. If there is a tax invoice that exceeds the amount of $1000 must have your name on it • You should have paid for all the items yourself. ==See also==