"When Australians go to Olympics overseas, they pay value-added taxes, they pay GST," he said. "Why would we not want people coming to Australia to make a contribution to taxes? So we decided it was important to have the GST in place before the Olympics," he added. The scheduled introduction date is July 1, 2000. The Games will be held in September that year.

The New South Wales state government reacted angrily to Costello's comment and said such a move would blow a A$110 million (US$68 million) hole in the games budget. "If the federal government went back on its commitment we would have to degrade the quality of the games," said the state government'sOlympics minister Michael Knight.

Knight raised concerns about the possibility of a GST on athletes' food and other services. "There is absolutely no way of recovering those costs -- it would probably cost us another $110 million," he told reporters.

The nation's conservative coalition government made tax reform the centre piece of its campaign in the October 3 general election that returned it to power with a much smaller majority.

The Labor Party opposition's fierce anti-GST campaign nearly won it the election. The government plans to sweeten the GST with income tax cuts and the abolition of a range of indirect taxes, including wholesale taxes on a wide range of goods.