Published on 01 Jan 04
by Australian Tax Research Foundation
The implementation in July 2000 of the Goods and Services Tax represented a major reform in Australian tax policy. An integral part of this reform was a major change in the way in which financial relations between the Commonwealth and the States were organised. The new arrangements, implemented under the Intergovernmental Agreement, involved the earmarking of GST revenue for the States, an important innovation in federal financial relations. This paper provides a personal evaluation of the system’s first four years of operation, and proceeds to consider a series of possible reforms which might increase the net benefits of the system, preserving those aspects of the new system which the author considers to be valuable but improving those areas where inefficiencies or inequities exist.
David Collins was an Adjunct Professor in Economics, Macquarie University at the time of writing this paper.