Tax cuts, higher household incomes and a boost to Australia’s economy will all be the result of a reform to the GST, according to a new report released by CPA Australia.
The accounting body released research findings pointing out four scenarios of changes to the GST that will offer the country benefits, with a 15 per cent GST highlighted as the catalyst for an increase in Australia’s GST revenue and Gross Domestic Product (GDP).
“We modelled different scenarios at 10 and 15 per cent, with each generating additional GST revenue ranging from $12.1 billion to $42.9 billion in the first year of introduction,” CPA Australia Chief Executive Alex Malley said.
“What our report shows is that additional GST revenue can be used to abolish a number of inefficient state taxes and also provide for personal income tax cuts and compensation for low income households, while also boosting economic growth.”
The report showed that pushing the GST up to 15 per cent and applying it to health, education and all food could be used to remove inefficient insurance taxes, motor vehicle stamp duty and conveyancing duty. This type of GST is expected to give Australian households an extra $749.40 per year, while the country’s GDP is expected to be increased by $27.5 billion.
Mr Malley said that raising the GST to 15 per cent would still be low compared to the 19 per cent average rate across OECD nations.
“We have around 125 taxes and charges of which just ten collect 90 per cent of the revenue. Households and businesses rightly want fewer taxes which are more efficient,” Mr Malley said.
“We also want a more resilient system, one that is less exposed to global shocks and commodity price drops.”
The Australian Chamber of Commerce and Industry (ACCI) welcomed the report, supporting the finding’s argument that an increase of the GST would cut a range of productivity-damaging taxes.
“The reforms tested in the research would make our tax system much simpler and fairer, creating a better environment for consumers and businesses,” Kate Carnell AO, CEO of the ACCI, said.
“Change to the GST can only come about with consensus among all federal, state and territory leaders. We urge governments and oppositions across the country to take this research seriously and avoid using the debate over the GST for political point-scoring.”