A customer looks at bananas in a supermarket in Sydney April 27, 2011
A customer looks at bananas in a supermarket in Sydney April 27, 2011 Reuters/Daniel Munoz

The Australian Council of Social Services has criticised Western Australia Premier Colin Barnett for suggesting that Australians will not notice if the goods and services tax or GST are imposed on fresh food. The premier was quoted as saying the fresh food exemption will only "unnecessarily complicate matters" and should be removed.

According to the West Australian, Barnett declared that he doesn't think people would notice. He said the change should be applied before lowering the GST-free threshold on international online shopping from $1,000 to $100. He told the Guardian that any change should be aligned with the fairer distribution model. Australian shoppers who buy goods abroad are under threat if the increase is allowed. The current system allows online shoppers who buy goods below $1,000 will not have to the pay the extra 10 percent rate.

Cassandra Goodie, chief executive of the Australian Council of Social Services, explained any increase on the goods and services tax would disproportionately affect Australians with low income. Fresh food has always been exempt from GST since it was first introduced in 2000. Goodie explaned that people with low and moderate income spend mostly on basic expenses like fresh food. She said Australians belonging to this income group would be less likely to bear the additional tax.

Goodie remarked that it is important for Australia to ensure people have access to fresh and affordable food. She recommended looking at other aspects in the tax system to raise funds. Before talking about putting GST on food, the issue of tax loopholes must first be addressed, including tax breaks around superannuation that appears to only benefit people with greater wealth.

Australian Treasurer Joe Hockey said the government does not have the financial capability to give tax breaks to Australians with low or middle incomes that would be needed to offset the increase of the GST. He believes it isn't the right time to increase the GST since there is already enough strain in the family budget.

Mathias Cormann, finance minister and acting treasurer, has confirmed the government's position. He said the federal government has no plans of changing the GST rate and any suggestion to the current tax system will have to be considered in 2015, using the white paper review process.