The 'grown-up conversation' we need to have about the GST
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An influential accounting organization in Australia has proposed the potential increase of the GST, marking a quarter century since the tax’s introduction.

CPA Australia announced plans to present a five-part proposal for “fundamental reform” to the GST in preparation for Treasurer Jim Chalmers’ economic reform discussions scheduled later this year.

Prime Minister John Howard’s government introduced the goods and services tax on July 1, 2000 – 25 years ago this week.

An increase to the GST has been mooted. (Getty)

The tax is set at 10 per cent on most goods and services sold in Australia.

“We need a mature dialogue about Australia’s tax framework and the inherent weaknesses within the GST,” stated CPA Australia chief executive Chris Freeland.

“For 25 years, the GST has seen little change, and its inconsistencies along with design flaws – such as the selective taxing of food items – have been overlooked.”

CPA Australia called for the government to “identify what a broadened tax base should look like” and model the revenue that would come from a change to the GST rate.

Freeland said it would result in decreased income tax for individuals and businesses.

“Most tax specialists believe that increasing the GST is the key to broadening the overall tax base,” he said.

“Reducing the reliance on personal income tax would put more money in people’s pockets and ultimately generate more revenue to drive economic growth.”

The GST was introduced by John Howard during his first term as prime minister. (Fairfax)

But, he said, any reform would also have to consider adequate compensation for those who would be hit hard by an increase with limited tax cut offset, such as lower-income households and pensioners.

“OECD statistics show that Australia has an unsustainably high burden on income tax, which means workers and businesses contribute a lot more of the base compared to other countries,” Freeland said.

Should Australia raise the GST?

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