VIC:Fed govt to cut Vic's GST by $2.5bn

AAP General News (Australia)
04-07-2011
VIC:Fed govt to cut Vic's GST by $2.5bn

MELBOURNE, April 7 AAP - The federal government will go ahead with a $2.5 billion cut
to Victoria's GST revenue.

Victorian Treasurer Kim Wells, who attended a meeting of state and territory treasurers
in Canberra on Thursday, said the federal government had indicated it would proceed with
the cut recommended by the Commonwealth Grants Commission.

"This $2.5 billion cut will make the task of delivering this year's budget far more
challenging," Mr Wells said in a statement.

"This cut will impact on every Victorian business and household."

The federal government has ordered a review of the way GST revenue is divided between
the states and territories.

Announcing the review last week, Prime Minister Julia Gillard said the formula used
to carve up GST revenue was flawed because it struggled to deal with changing economic
conditions and mining growth.

Mr Wells said the GST cut should be suspended until the review was complete.

"(Federal) Treasurer Wayne Swan has insisted that the review will take three years
before any reform is implemented," Mr Wells said.

He said Mr Swan had also rejected Victoria's recommendation to improve the review's
terms of reference by encouraging states to achieve productivity growth and pursue economic
reform.

"Unfortunately, it appears that Treasurer Swan is more interested in running a political
agenda than an economic reform agenda," Mr Wells said.

AAP mj/pmu/ajw

KEYWORD: TAX VIC

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