GST WA: About the GST reforms

Have your say about GST reforms

If you would like to show your support in keeping WA’s fair share of the GST, you can have your say below.

Have your say

What is GST?

GST stands for Goods and Services Tax. It’s a 10% tax added to most things you buy or consume in Australia.

When businesses sell goods or services, they collect this tax from customers and send it to the government (specifically, the Australian Taxation Office).

The Australian government then distributes this money to the states and territories to help pay for things such as hospitals, roads, and public schools. 

The history of GST in Australia 

The GST was introduced in Australia in 2000. It’s a 10% tax added to most goods and services sold or consumed in Australia. Many countries around the world have GST applied to their goods and services at various rates. This is sometimes referred to as VAT in other countries.

Not everything in Australia is taxed—some food, health, and education items are exempt from GST.

GST replaced older taxes like the Wholesale Sales Tax and several state taxes.  

How the GST is shared in Australia 

The Commonwealth Grants Commission (CGC) is responsible for working out each state’s share of the GST based on how much money each state can raise (from sources other than the GST) and how much it costs them to provide public services. It then advises the Australian government.  

Australia has eight states and territories with diverse economic, social and geographic circumstances. This leads to differences in the cost of providing services to residents and different capacities to raise revenue from taxes.

The Australian Government helps put State governments in a position to provide their residents with comparable services by distributing revenue from the GST pool according to need.

The CGC determines how much GST each State and Territory receives using a method called Horizontal Fiscal Equalisation (HFE). HFE is the system Australia uses to share GST revenue fairly between states and territories. The goal of HFE is to make sure every state has enough money to provide similar levels of public services for things like hospitals, schools and transport.  

WA’s share of the GST 

The money collected in Australia from GST is distributed to states and territories based on how much they need to spend and how much they can raise on their own.

Due to the GST reforms introduced in 2018, WA benefits from a fairer GST distribution – WA still only receives 75% of its per person share of the GST. Even with the reforms, WA still receives the lowest share of any other state or territory.  

This is due to the GST floor, which was introduced as part of the 2018 GST reforms to make the GST system fairer. Without these reforms, WA would receive just 18% of its population share — or about $6 billion less a year.   

How did we get here? The 2018 GST Reform

In 2018, the Productivity Commission reviewed how GST was shared between states.  

Based on its findings, the Commonwealth Government introduced the 2018 GST reforms that:

• Set a minimum GST floor ensuring that no State or Territory receives less than 75% of its per person share of the GST.  
• Guarantees as of 2026/27 that no state gets less per person GST share than whichever of the two states is the lowest (NSW or Victoria).
• Provides an annual top-up to the national GST.  

The Commonwealth also provides a no worse off guarantee that no State will receive less funding than they would have under the previous arrangements. This no worse off guarantee was extended until the end of 2029-30 at the National Cabinet meeting in December 2023. 

What does the GST distribution mean for WA? 

The 2018 GST reforms are assisting WA to:

• Fund hospitals, schools and infrastructure
• Avoid raising other taxes to cover shortfalls
• Support national productivity through WA’s strong economy and exports. 

Some facts about WA’s GST distribution share 

• Assessment of each state and territories advantages and disadvantages is made to advise how much GST revenue each state and territory should receive.
• WA’s capacity to raise revenue is higher than the national average with higher revenue from mining royalties and payroll tax.
• In 2023-24, WA’s contribution to the nation was over $13,000 per person –19 times that of NSW (at around $700 per person) – the only other State making a positive contribution.  
• In 2024 – 25, Perth’s population has grown and become more concentrated, which has increased the need for WA to invest in infrastructure for the State.
• The cost of providing government services in WA is higher than the national average. Currently, 12% of WA’s population live in outer regional and remote areas, compared with the national average of 10%. This means service costs are higher.
• WA receives the minimum floor GST distribution, which is only 75% of our per person share, below the national per person average and the lowest of any other state or territory. 

To find out more about how this distribution impacts WA and the Australian economy visit GST WA: What would changes to the distribution mean?

Review of the GST reforms 

As part of the 2018 GST reforms, the Australian Government legislated the Productivity Commission to conduct an inquiry into whether the GST reforms are operating as intended by the end of 2026. On 24 September 2025 the Australian Government announced commencement of this inquiry.  

The Productivity Commission is inviting the public to share their views on the reforms and will provide an interim report to the Government by 28 August 2026, with a final report expected before 31 December 2026.

This report will help inform the Australian Government whether the 2018 GST reforms are operating as intended, or if the GST distribution system could be improved. 

What GST distribution changes are being reviewed?

As part of the 2018 GST reforms, the Australian Government legislated the Productivity Commission to conduct an inquiry into whether the GST reforms are operating as intended by the end of 2026.  

The Productivity Commission is reviewing how the GST is shared between the states and territories. The review will look at whether the system is still fair, reliable and helps each State plan for the future.

The Productivity Commission’s review will consider:

• If the current GST system gives each state and territory a fair share of GST
• How well the system balances stability with flexibility, so states can plan their budgets and respond to change
• Whether it helps states and territories improve the way they deliver services and raise their own revenue
• If the system is financially sustainable for both the Commonwealth and the states.

The Commission will also look at whether there are better ways to achieve these goals. 

Western Australia will fight to protect the 2018 GST reforms, which ensure all States receive their fair share. 

Have your say about GST reforms

If you would like to show your support in keeping WA’s fair share of the GST, you can have your say below.

Have your say