Brief
Grattan Institute urges GST rise to fund tax cuts, backed by Spender and Chalmers adviser
The think‑tank says a higher GST could fund income‑tax cuts for low‑ and middle‑income workers and boost welfare payments.
By Felo News Desk · Published
Australia’s Grattan Institute has called for the Goods and Services Tax (GST) to be increased from 10% to 15% and expanded to cover all food items, a proposal that would raise about $76 billion a year, according to a report due on Monday.
The institute’s chief executive, Aruna Sathanapally – who was appointed by Treasury minister Jim Chalmers to the economic reform round‑table – says the extra revenue should be split between $33 billion for income‑tax cuts targeting lower‑ and middle‑income earners and $25 billion for JobSeeker, pensions and rent assistance. Sathanapally told SMH that lower‑income families could be about $8,000 a year better off under the plan.
Former Liberal ministers Josh Frydenberg and Mathias Cormann, as well as Labor figures Bill Kelty, Paul Keating and Lachlan Harris, have also called for GST reform, adding pressure on Prime Minister Anthony Albanese and Treasury minister Jim Chalmers, who have faced criticism over rising federal and state spending and inflation concerns.
State governments, the Grattan report notes, have been outpacing the Commonwealth in spending growth, with Queensland, Victoria, Tasmania and the Australian Capital Territory all seeing credit‑rating downgrades, while the national rating remains steady.
In a related controversy, the Australian Tax Office’s decision to stop accepting credit‑card payments – a move known to ministers since July, according to Assistant Treasurer Daniel Mulino – has added to the government’s fiscal headache.
Key facts
- The Grattan Institute proposes raising GST to 15% and extending it to all food items. (smh.com.au)
- The proposal would generate $76 billion annually, split between tax cuts and welfare spending. (smh.com.au)
- Aruna Sathanapally, appointed by Jim Chalmers, leads the institute’s recommendation. (smh.com.au)
- MP Allegra Spender and former Coalition ministers have publicly supported the GST increase. (smh.com.au)
- State governments have experienced credit‑rating downgrades while the federal rating stays steady. (smh.com.au)
Sources
- [1] smh.com.au — originally reported as “Tax reform: Allegra Spender backs increase in GST to offset tax cuts”
