The annual debate over the redistribution of GST continues after Victoria received an extra $3.6 billion.
Days after the Commonwealth Grants Commission (CGC) released its latest GST redistribution decision, economists are renewing their critique of the system, and how it encourages states not to make tough decisions to improve productivity.
The report grants Victoria an additional $3.6 billion while slashing Queensland’s share by $1.2 billion.
The CGC justified Victoria’s increased allocation citing its economic struggles, population growth, and inability to raise revenue via mining.
Queensland lost funding because of an increase in coal royalties driven by global prices and a higher royalty rate.
John Humphreys, chief economist of the Australian Taxpayers’ Alliance said this demonstrated how productive states were being penalised by the system.
“The problem with the GST system is that the money is raised by the federal government and then distributed to the states in a way that actively punishes the productive states,” he told The Epoch Times.
Related Stories
“States that make tough economic reforms to improve productivity are punished with less GST, while those relying on…
Read the full article here