The Great State Take debate

WA gets the short-end of the GST straw, but for how much longer?

Tessa Dempster
August 6, 2017
GST, or the Goods and Services Tax was initiated at the start of the millennia and works by putting away a little snippet of our spending in a year, to form a savings fund of sorts for each state. At the end of each financial year, the piggy banks are emptied, counted then returned to the state as extra pocket money - well that is the theory. Since the mining boom, our lovely state has been getting royally shafted when it comes to the GST fork out each year. So it comes as no surprise, when the GST return rates we listed recently, WA was given a supporting role. It seems this tax is best for everyone unless you’re out West.

What we get vs what we provide

In 2000, the broad-based tax system began taking 10% each and every time we spent money on most goods, services and additional items purchased across Australia. Whilst the tax system has its perks, for example eliminating the headache of tipping when you’re trying to survive a food coma (take note America), the repayment distribution to each state has been heavily criticised.  The revenue generated state-wise each financial year is returned on a per-capita basis, or it’s supposed to be – if only Western Australia was so lucky. 

What you earn (or save) is what you should get back, however for some states earning above the normal rate, this means giving up some of the hard spent cash-money to help out lower earners . Whilst most other states receive fairly close to a $1 for $1 return on their GST, WA rarely sees more than 30c on the dollar calling for yet another inquiry into why WA is still suffering a historic low in GST returns. Meanwhile the Northern territory sees a return of $4.66 on every dollar - seems to bring in a tidy profit. So if you were wondering wherel your tax goes…. it’s with our northern neighbour.

GST distribution per state dollar return
‍GST distribution per state dollar return

Being high earning doesn’t always pay off

The report released by the Commonwealth Grants Commission stated WA possessed the strongest fiscal capacity in the nation. Despite a previous GST estimate of 38c, the released distribution has been a little lower than expected, four cents lower to be precise. Whilst it doesn’t seem like a great deal, the drop means a $240 million loss to the state.  WA is in its fourth year of domestic recession with the worst performing economy in the country, a fact pointed out recently by the new WA treasurer Ben Wyatt. With layoffs, shutdowns and a tough job market, it doesn’t feel like WA is very “fiscally strong”.

Call for reform

Our calls for reform have not fallen on deaf ears as it appears the Federal Government has finally taken notice, ordering an independent inquiry into the system’s distribution methods. However, just 24-hours after the announcement the other smaller state’s piped up about having their bankroll taken away.

Recent estimates offer a more favourable return to WA by the year 2020, which by then the mining industry will have been well and truly dried up leaving the rest of the country to support us for a few years (a bittersweet victory of sorts).

Tessa Dempster

Hi, I'm Tessa. I've lived all over Western Australia getting to sample food, wine, local events and more. I'm merciless when it comes to a long black, love a glass or three of red wine, and can often be found showing off my eccentric but enthusiastic moves whenever there is music playing (shopping centres included). I now document my finds and antics for Perth Underground. Hit me up if you want me to come discover your business! I'd love to pop by for a chat.