How does the collection and allocation of the GST work?
The collection of GST revenue is administered by the Australian Taxation Office. While GST is a tax on a national base, all GST revenue collected is received by the States and Territories (States). As agreed by all States, the Commonwealth Grants Commission (CGC) makes recommendations as to the distribution of the GST revenue between the States and Territories. The CGC’s recommendations are based on the principle of Horizontal Fiscal Equalisation to ensure that if each made the same effort to raise revenue from its own sources and operated at the same level of efficiency, each would have the capacity to provide services at the same standard. However, States can spend their GST revenue according to their own budget priorities. The CGC recommends relativities for the distribution of GST that are applied to State populations to determine a weighted population for each State. The Australian Government uses the weighted populations to distribute the GST revenue pool. In accordance with the
