Does NSW contribute the most in GST and income tax only to see it doled out to the other states?

By James Lane, Louise Evans and Tiffanie Turnbull

The Statement

“The people of NSW contribute the most in GST and income tax, yet are forced to sit and watch as it’s doled out to other states.”

NSW Treasurer Dominic Perrottet. June 19, 2019.

The Analysis

NSW Treasurer Dominic Perrottet used his state budget speech to call for a review into federal funding, claiming it was “manifestly unfair” to NSW which suffered a $2.3 billion writedown in expected GST revenue from the federal government over the next four years. [1]

AAP FactCheck examined the treasurer’s claim that NSW contributed the most in GST and income tax, only for it to be "doled out” to other states.

The Goods and Services Tax (GST) is defined as a 10 per cent tax that’s applied to most goods and services. [2]

According to the Australian Bureau of Statistics, NSW contributed the most GST tax revenue for 2017-18 with $13.8 billion, Victoria was second ($10.6 billion), followed by Queensland ($5.3 billion), Western Australia ($2.4 billion), South Australia ($1.8 billion), Tasmania ($471 million), the ACT ($320 million) and the Northern Territory ($203 million). NSW's revenue represents 39.6 per cent of the GST total. [3]

NSW also topped income tax revenue as a percentage of returns for the 2016-17 financial year - the most recent data available from the Australian Taxation Office. NSW led the nation providing 31.5 per cent of tax revenue ahead of Victoria (25.3 per cent), Queensland (19 per cent), Western Australia (10.7 per cent), South Australia (6.8 per cent), Tasmania (two per cent), ACT (1.9 per cent) and Northern Territory (0.9 per cent). [4]

For the GST carve-up from the federal government to the states for 2019-20, NSW will receive the biggest share (27.9 per cent) followed by Victoria (25.7 per cent), Queensland (21.1 per cent), South Australia (10.1 per cent), Western Australia (5.4 per cent), Northern Territory (4.1 per cent), Tasmania (3.6 per cent) and the ACT (2.1 per cent). [5]

NSW’s GST share increased from 27.4 per cent in 2018-19 to 27.9 per cent in 2019-20 and the state’s GST entitlement in 2019-20 will rise by “$1012 million ($1.012 billion), or 5.5 per cent”, according to the Commonwealth Grants Commission. [6]

Based on these figures, AAP FactCheck found Mr Perrottet's claims to be mostly true. He is correct in claiming that NSW contributes the most in GST and income tax. However NSW also receives the highest GST allocation from the federal government.

The Verdict

  • Mostly True - Mostly accurate, but there is a minor error or problem.

The References

1. ’Increase ‘not the answer’ on GST’, by Michael Roddan and Andrew Clennell. The Australian. June 19, 2019: https://www.theaustralian.com.au/nation/politics/increase-not-the-answer-on-gst/news-story/8be0b7fd8ee9696b9b3e3519177422c1

2. ‘GST’. Australian Taxation Office. Australian Government. September 3, 2018: https://www.ato.gov.au/business/gst/

3. ‘5506.0 - Taxation Revenue, Australia, 2017-18’. (Tables 2-9). Australian Bureau of Statistics. April 29, 2019: https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5506.02017-18?OpenDocument

4. ‘Taxation statistics 2016-17’. (Chart 9: Individuals - returns by state/territory, 2016-17 income year). Australian Taxation Office. Australian Government. June 3, 2019: https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Taxation-statistics/Taxation-statistics-2016-17/?anchor=Individuals#Chart9

5. ‘Report on GST Revenue Sharing Relativities 2019 Update’. Commonwealth Grants Commission. (Page 2, Table 1 Relativities, shares and illustrative GST distribution, 2018-19 and 2019-20). 2019: https://www.cgc.gov.au/sites/default/files/2019_update_report.pdf

6. ‘Report on GST Revenue Sharing Relativities 2019 Update’. Commonwealth Grants Commission.(Page 9). 2019: https://www.cgc.gov.au/sites/default/files/2019_update_report.pdf

  • First published June 20, 2019 15:33 AEST