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Raising the GST to 15%

For the umpteenth time, tax reform is back on the agenda—this time as the centrepiece of Treasurer Jim Chalmers’ latest economic summit aimed at lifting productivity. He’s now positioning himself as a champion of efficiency and a warrior against red tape. But it’s hard to take that seriously when, according to recent reports, the Albanese government has added more than 5,000 new regulations in its first term alone. It’s a familiar pattern: a flurry of committees, consultations and reviews, with little real appetite for structural change.

We’ve been here before. The Henry Tax Review, delivered in 2009 and chaired by Treasury Secretary Ken Henry, was promoted as a once-in-a-generation opportunity to overhaul Australia’s tax system. The goal was to build a fairer, simpler, more sustainable framework for an ageing population and a globally competitive economy. But from the outset, its hands were tied. The GST was off-limits, as were tax-free super withdrawals after 60, and the politically sensitive excise duties on alcohol and tobacco – three of the most significant and contentious levers in the tax mix. That exclusion crippled its ability to deliver truly comprehensive reform.

Of its 138 recommendations, only a handful survived. The super guarantee was locked in to hit 12%. A mining tax limped through, so diluted it sparked industry fury and helped topple a PM. Small and medium businesses got a company tax cut, but the rest – think income tax tweaks, stamp duty reform, and family payment overhauls – were swept under the rug.

The problem is that any real tax changes are politically toxic. Just look at the current system. Once a person earns $135,000, they lose 39% of every extra dollar. That jumps to 47% after $190,000. These are hardly extravagant incomes by today’s standards, yet we’ve created a structure where effort is punished at the margin. It discourages productivity and encourages people to find ways to minimise tax – hardly a recipe for economic growth.

There’s been talk for years about eliminating the capital gains tax exemption on the family home, but that’s a practical impossibility. No government would dare touch it – and even if they tried, the wide disparity in house prices across Australia would make it unworkable.

Reducing the 50% capital gains tax discount is another idea that’s often floated, but implementing it is far from simple. Any change would have to start from a set date – but even before then, markets would be distorted. A rush of purchases would likely be followed by a slump, throwing long-term planning into chaos. And unless inflation is factored in, removing the discount would breach a fundamental tax principle: you shouldn’t tax inflationary gains.

Super is always in the firing line. There’s talk the government might impose a 15% tax on pension-phase accounts that are currently tax-free. But that would defeat the entire purpose of super: to provide a low- or zero-tax environment in retirement. A couple with $800,000 invested in their own names would pay no tax anyway, thanks to offsets and franking credits. If you tax their super, they’ll just pull the money out and invest it outside the system.

Then there are the perennial rumours about family trusts. Many small business owners—who are also among the country’s main wealth creators—rely on trusts for asset protection. If you’re a sole trader or in a partnership, your personal assets are on the line if things go bad. That’s why most use trusts or companies. A trust doesn’t pay tax—it distributes income to beneficiaries, who then pay at their marginal rates. Yes, trusts can offer tax advantages, but they’re modest. Distributions to minors are taxed at the top marginal rate above $416 a year. And with the 30% bracket now stretching to $135,000, there’s little point targeting trusts with new taxes—owners will simply shift distributions to wages.


Source: Firstlinks, Australian Bureau of Statistics [www.abs.gov.au/statistics/economy/government/taxation-revenue-australia/2023-24]

If we’re serious about reform, the only practical solution is to lift the GST to 15% with no exemptions. That would hit the black economy hard and ensure retirees – who currently contribute very little – help cover the rising cost of services.

Of course, any GST increase will be slammed as regressive. But so are petrol taxes, liquor excise and cigarette duties – and no one seems to object to them. The strength of the GST is its efficiency. It’s almost impossible to avoid. It captures a broad slice of the cash economy, and while it does affect low-income earners, it hits big spenders hardest – those with the most disposable income.

 

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noel@noelwhittaker.com.au.

 

106 Comments
Pete from out the back
July 16, 2025

It seems to be evenly distributed between get rid of social spending or weigh taxes more heavily on those who can afford them.

We need to rebalance the equity in our society, and repair the damage caused by the wealthy persuading government and enough fools to believe that taxes are too high and the money is spent on the undeserving.

We have the situation where vested interests control the means for living happily and want to keep more of the wealth and opportunities for themselves and their offspring.

Too many times in the past societies have given over wealth to a greedy grasping few, and it's only by bloody revolution that a balance is achieved... even when it's imperfect.

Trickle down economics, user pays, public-private partnerships, subsidy based development and extraction, and the LNP economic and fossil fuel plans are all examples of wealth transfer from the many to a select few.

Make the buggers squeal and see productivity rise as they work hard to assuage their insatiable greed and their wealth, not by gaming the government but actually creating something.

Investment in wealth creating activities has fallen over the last few decades. It's time to force more investment to earn that wealth.

Dudley
July 16, 2025

Stop wealth transfer from the few to the many.
Make the blighters squeal and see productivity rise as they work for their money.

James#
July 16, 2025

"Make the buggers squeal and see productivity rise as they work hard to assuage their insatiable greed and their wealth, not by gaming the government but actually creating something."

Totally misguided! Truly wealthy people are more often than not business founders with a lot of skin in the game. They are innovative, entrepreneurial and provide a needed product or service. They employ many, pay a myriad of taxes and contribute to a productive economy. But it's never enough for some. Here in Australia wealth and success are not celebrated or seen as inspirational as they are in the USA. No wonder our economy is neither wide nor deep. Australia the dumb country. We largely dig up or extract the earth's bounty, export it, and then buy back a finished product for ten times the export value!

The progressive tax system ensures that the better paid pay a lot more tax, in fact the greater percentage of it. As for taxes on wealth that is something that governments dither on as they are too afraid of wholesale reform. But hardly the fault of law abiding citizens who invest their savings legally!

Perhaps ponder too why is it that our PM gets paid more than POTUS or the UK PM and we have a veritable hoard of grossly overpaid, unproductive public servants inhabiting the corridors of council, state and Commonwealth government but productivity is still woeful!

GeorgeB
July 16, 2025

Perhaps the biggest flaw of democracy is that the vote of the "totally misguided" is equal to the vote of the "innovative, entrepreneurial that.. provide a needed product or service...employ many, pay a myriad of taxes and contribute to a productive economy".

We then end up with a government that promotes a culture where "wealth and success are not celebrated" but is instead weaponized with the approval of the "totally misguided" to extract even more wealth from the minority that is already the victim of a "progressive tax system (that) ensures that the better paid pay a lot more tax" in fact about 20x more for the top 1%, but is "never enough" for the "totally misguided".

So its hardly surprising that despite our natural wealth Australia is in debt and in the doldrums of productivity and remains "the dumb country that.. largely dig up or extract the earth's bounty, export it, and then buy back a finished product for ten times the export value".

Dudley
July 16, 2025

"20x more for the top 1%":

From 'ATO percentile distribution dataset 2022";

100th percentile
Income Range $421,936 or more
Gender Mix 72% Male 28% Female
Tax Burden $443,545 average tax paid, 20% of total tax revenue
1% pay 20%.

50th percentile
Income Range $66,600 to $67,639
Gender Mix 52% Male 48% Female
Tax Burden $11,906 average tax paid, 0.53% of total tax revenue.
1% pay 0.53%.

Lorraine
July 15, 2025

Increase the GST to 15%. To compensate the welfare sector you could increase welfare payments.
GST means it gets everyone.

Dudley
July 15, 2025

To compensate the capitalist sector you could increase their assets by 5%.

Paul
July 15, 2025

How about cut the funding for immigration and stop taking in large numbers of refugee's and then having the costs involved in setting them up with a home, car and a job.

This alone would ease the pressures on the rental market, cuts the govt spending in all kinds of areas (police, health, .etc)

Peter
July 15, 2025

Yes this is a great common sense approch.

FRANCESCO
July 13, 2025

i have posted this before, introduce a pension to every Australian. Increase the Tax-free threshold to $50000, this will enable the Govt to remove all welfare, one of our biggest costs, no NDIS no unemployment benefits, no disability pension, everyone gets a pension, if you want to earn extra go work, i personally know people on pensions that could easily work, i know people who have taken advantage of the NDIS, remove it all, then we have a flat income tax of say 20% and then increase the GST accordingly not sure how much it would have to increase, then no discounts on capital gains, no depreciation benefitting anyone all gains would be at the 20%, productivity and investment would also benefit, no mucking around, everyone knows where they stand, let's do it

Garry
July 13, 2025

Lower income tax rates and company tax.
Tax land, resources and carbon properly. The land, resources and air belong to everyone and are allowed to be profited from very cheaply without a fair resources rent tax to the Australian public. Land banking from developers would incur land tax to speed up developments.
Increase taxes to tax free super pensions.
Tax should be paid on the PPR easy to do, should be treated as an investment when sold and capital gain tax paid as public has viewed their house as an investment over the last 25 years.
No increase to GST penalising the poor far too much.
Reduce government wasteful spending.

Steve
July 13, 2025

We should try a 15% flat INCOME tax rate instead, and see what happens to the productivity rate then.

Richard
July 14, 2025

Just like Singapore. No deductions would create a much simpler and effective overall tax system

Andreas
July 13, 2025

Noel,

You are talking your own book here.

Lifting GST will disproportionately hit those in the lower social-economic classes - where increasing numbers of people reside.

Those who consume with everything their earn.

The true path forward is a wealth tax, and removal of the income tax + GST.

Let people build wealth so they can use it productively. Then tax them on it. Rather than stealing it before they see it.

Income tax is theft.

Moreover, the government needs to take a chainsaw to its spending. It was never mandated to become the biggest employer in the nation. We more resemble the USSR these days than a capitalist nation.

Leave the GST. Go after government spending. The books will balance.

Welfare is bad for the soul. A century of history tells us that.

Peace.

Emma
July 13, 2025

Cannot agree more.

The rapid growth in Government Spending in employment costs is the key. And I would add NDIS to the list. Politicians are battling around the bush and deliberately silent on the root causes, mainly for political concerns. After all, anyone who dare to cut costs in these two areas may not have a job in the government offices or even lose the chance of getting lucrative defined-benefit pension only available to high ranking public servants these days

GeorgeB
July 13, 2025

"The true path forward is a wealth tax...Income tax is theft"

So retirees who lost half their wealth to income tax should now lose the other half to a wealth tax??

D
July 13, 2025

Thats incorrect. A low GST predominantly benefits wealthy people. Poorer people are only impacted by discretionary spending - which is obviously a choice. While wealthy people benefit from a reduced income tax burden and a miniscule GST.

R
July 13, 2025

Never seems to be any discussion about reducing spending, just increasing taxes.

Socialists are never happy

John
July 15, 2025

Agree, well said

Trevor
July 15, 2025

Reduce spending. Start by cutting the abc’s budget by 90%

Mark Pearce
July 12, 2025

Can we get Gina or Twiggy to run DOGE in Australia?

David
July 12, 2025

I'm generally progressive but with a sweat income of 350k and an effective tax rate of ~41%, it doesn't feel like it's worth the stress per dollar after tax.

I'd understand it if the trains worked, if the government was boosting healthcare or if we were building enough houses...

But we are not.

Meanwhile mega corps and the structurally wealthy pay little to no tax.

I did everything right and it's still so damn hard to get ahead, about ready to give up.

Dudley
July 12, 2025

"ready to give up":

Government is trying to tell you to incorporate and cease sweating so much.

'If 50% or less of the income received for a contract/invoice was for your labour, skills or expertise, then none of the income received is Personal Services Income.'

Company tax rate for companies that are base rate entities is 25%. Company tax imputed with dividends when distributed; which might be a holiday year or during retirement.

Mark
July 13, 2025

Try living on $25.000 as a pension per year no super or savings before you complain Mr $350.000.

Dudley
July 13, 2025

"$25.000 as a pension per year no super or savings":

If Australian Age Pension, must have assessable assets of:
Homeowner: $383,500.
Non-homeowner: $641,000

"no super or savings":
Single Age Pension : $29,874 / y.
No tax, no investment, no effort, free money.

Trevor
July 12, 2025

People forget what the GST was about, it was not a Federal Tax for the benefit of the Federal Government it was to replace State and Territory charges such as stamp duty etc and then divided in accordance with a formular and can only be changed if all Parties agree.

Tony
July 12, 2025

We've been told before that the GST would eliminate the Black market. Yet every tradie I meet still has a GST excluded price, for cash.

Increasing the rate will encourage .ore cash transactions. And let's not talk about the cigarette black market.

Pete K
July 13, 2025

Tony, it's a rort. If a tradies offers you 10% discount for cash, you should counter with at least 35% discount. 10% GST off, and 25% (est.) income or company tax off.
I pay my taxes (still, although I'm retired) so should they. Don't do cashies!

Robert
July 14, 2025

Except the states did not remove all duties, they kept stamp duty on property purchases which is a river of revenue for them now. Also there are a number of state taxes and duties increasing every year. Won't give that up in a hurry. States also have ever increasing (not indexed) income from land tax. Maybe we need to clip their wings and reduce gst. Whether talking federal or state taxes it is clear that government expenditure is out of control, we need to start there?

Merv Maxwell
July 30, 2025

The original idea was that the GST would apply to everything, but when Harradine pulled the plug and would not back it Costello did a deal with the Democrats to exclude food and medical to get the legislation passed. The States therefore had less revenue, and so stamp duty was not abolished.

GeorgeB
July 30, 2025

"The States therefore had less revenue, and so stamp duty was not abolished"

Not only was stamp duty not abolished it was allowed to treble in Victoria by not adjusting bracket creep so that an average priced property is now charged 6% rather than 2% in the 1980s.

John Hutchinson
July 11, 2025

Raising GST to 15% is a 50% hike and is just a ridiculous increase to hand these clowns in government to spend.

The GST is a consumption tax and if revenue isn't meeting the expectation, it means consumption is falling, therefore an increase in GST is going to have the same effect as increasing Interest Rates, consumption will further.

Reducing GST may actually be the smarter move though I can't see that being touted any time soon.

Grant
July 11, 2025

Rid all states of Upper Houses...
Rid the Fed. Gov. of the Senate...
The savings are in the 100's of millions or billions...
Do 't like what the gov. does in 4 years...kick them out..

James#
July 13, 2025

Will never happen! Asking politicians or bureaucrats to do themselves out of cushy jobs is akin to asking an executioner to put his own head on the chopping block!

Besides which, Labor has also grown overall public servant numbers considerably at both Commonwealth and state levels, because unsurprisingly, the majority tend to vote to the left!

peter
July 14, 2025

finally, someone seeing the big picture. them & their fat cat mates been rorting the system forever

Graham
July 11, 2025

The real problem is house prices and paying capital gains forward .



GST is a disaster......it needs to be replaced with EST economic sustainability tax....to be a used as a tool to combat inflation and dampen imports. It would be a Federal Tax .



To stop tax churning which applies to state payroll tax and land tax impacting renters the GST will be replaced with federal EST and PAYG on wages wil be in 2 components Federal PAYG and State PAYG



So let's get the Federal treasurer and Treasury Secretary into the office and tell them to reform our archaic tax laws and stop the banks destroying our way of life.

Adam
July 11, 2025

charging royalties on offshore gas at a realistic price and possibly have something like doge

Ken
July 12, 2025

I agree. Big corp's have too much power. Stop politicians entering into sweet heart deals with these big corp's.

D Sondegaard
July 11, 2025

Instead of tinkering around the edges with lowering tax rates, which leave high earners richer and low earners with a fiver in their pocket, how about raising the tax-free threshold substantially. If it went up from an embarrassing $18200 to $30000, then everyone from millionaires to lower paid wage earners would be on an equal footing.
This would genuinely put more money in everyone's pockets ( as the government keep harping on as their mantra)
This would offset the need for everyone to have their hand out for government controlled handouts and subsidies.And it IS all about government control.
Raise the tax free threshold and stop wasting tax payer money.

GeorgeB
July 11, 2025

“how about raising the tax-free threshold substantially. If it went up from an embarrassing $18200 to $30000”

Interestingly the tax free threshold has been set at about 10% of the highest tax threshold for decades.
1995
Tax-free threshold $5,400
Top marginal rate 47% from $50,000
2025
Tax-free threshold $18,200
Top marginal rate 45% from $190,000 (was $180,000 before 2024 cuts)

“Raise the tax free threshold and stop wasting tax payer money”
You probably need to stop wasting taxpayer’s money BEFORE you can reduce taxes. That could be a hard task for a socialist govt.

Mick
July 11, 2025

Abolish income tax for over 55's to allow individuals to pay off there morgage and grow there asset base to lessen the likelihood of a requirement for the pension. A short term loss for a long term gain for the budget in the future when less people are relying on the pension to be there source of income. If the government really want to save money reduce paying X politicians over inflated lifetime pensions, providing offices, office staff, cars, travel expences and any other perks I have missed. Reduce it to 1 year and let them work like everyone else. The money saved from this alone is quite significant.

James#
July 12, 2025

"Abolish income tax for over 55's to allow individuals to pay off their mortgage and grow their asset base to lessen the likelihood of a requirement for the pension."

Better still to use world's best superannuation practice, and not tax contributions and earnings (maximum compounding) and then tax withdrawals at normal rates! Compounding works best over a longer period.

Problematic though, as government already has a massive spending problem (although they don't seem to realise it) with over reliance on income tax and super taxes. Mind you we live in a small population country where our Prime Minister and even state premiers get paid more than POTUS or the UK prime minister! Go figure.

As for reducing politician and bureaucrats pension entitlements it will never happen. Tasking a department etc to make cuts and reductions in benefits that would directly impact them is naive and risible! Now if we were all in the same superannuation banana boat......maybe they'd stop cherry picking accumulation schemes!?

G Hollands
July 14, 2025

You do realise, don't you that Keating 'Traded in ' that model for the current version?
Prior to his dabbling the old S 23F super Funds were exempt from income tax provided they complied with what was called the 20/30 rule. This meant that if 20% of the assets of the fund were held in Government securities, of which 30% were Commonwealth securities, then bingo, no tax payable. That was abandoned for the current system.

Dan Andrews
July 11, 2025

Over the course of my working life due to my profession, I have paid over $3m in income tax. I think k I have paid more than my fair share over my working life. I'm 2 years away from retirement and will be a self funded retiree. I wont benefit other than pay more tax through a 15% GST. How about government lives within its means - NDIS rorts would be a good placed to start - before coming after people like me.

Rob W
July 11, 2025

So many people have this similar attitude of "I've paid my share, etc.", but I say, If you are still alive you are still using some form of government services, roads, police, ambos, fireys, etc. and they need to be funded by the people that use them - ie. you and me, irrespective of how much tax we paid in the past - which is completely irrelevant and is not how taxation works. Tax paid in the past simply paid for past servicers. Get over it.

GeorgeB
July 11, 2025

"government services, roads, police, ambos, fireys, etc…need to be funded by the people that use them…Tax paid in the past simply paid for past services. Get over it."

The problem with this simplistic argument is that while everyone benefits from past and ongoing government services they are not always funded by the people that use them. About 42% of all adults in Australia pay no tax, while the top 1% of taxpayers pay 18x their share of tax while also being disqualified from receiving the same share of services (eg.no age pension in retirement or other concessions) so you can’t blame them for pointing this out when told that they need to pay more while getting less. Easy to say "get over it" when you have been the net beneficiary of a generous welfare system that we have come to expect living in a relatively wealthy country.
https://www.owenanalytics.com.au/tax-pyramid

Rob W
July 12, 2025

Dear George B,
I have never been, and am not currently, the recipient of any government welfare, my salary was always too high, so don't lecture me about paying more for less, isn't that exactly how a progressive taxation system is supposed to work??

GeorgeB
July 12, 2025

Having contributed $millions over a lifetime of progressive income taxes, I also don’t need to be lectured about the merits of our progressive taxation system.
In any event it was never meant to be a "lecture" but an expression of solidarity with a fellow taxpayer who feels that he has paid more than his fair share after a lifetime of contributing to our “progressive taxation system".
To get an appreciation of the contribution consider that, if every $1 million of income tax was instead saved to a superfund, it would now be generating about $100,000 every single year.
In the case of someone who contributed $3m+ income tax, the ONGOING SAVING to the government and to the community in reduced borrowings (or alternatively accrued social benefit) is more than 3 times what the average income earner makes in a year.
Many reasonable people would agree that more than covers that taxpayers share of govt services in retirement particularly since he will soon be a self-funded retiree and will continue to contribute to govt budgets rather than being a drag on them.

LH
July 11, 2025

Instead of raising taxes. How about the government stop wasting taxpayers money. Stop all politicians from constantly getting annual pay rises. Stop all the lavish politicians pensions. Have all politicians be accountable for their actions. This would be a good start.

Michael
July 13, 2025

So true, nothing affects them with their massive wages, investments, pensions, jobs for the boys etc. as stated. They get all this handed to them instantly but the average person has to kick, bite, scream, protest, strike to get a miserable percentage of what they get. ??

Phillip
July 11, 2025

What is the trade off for increasing the GST ...make it 30% and you pay no income tax and get rid of all the other taxes...every think you buy 30% GST eg ...you learn a $1000 a week or more no tax but every thing you buy 30% GST ...if you dont buy anything that week you pay no GST

Tom
July 11, 2025

You left out GST on services ?

Harry
July 12, 2025

Strongly agree with this. If from when the GST was introduced, it was increased regularly as income tax was reduced, we would have a far simpler, harder to avoid taxation system

lyn
July 13, 2025

Harry, inclined to agree. Can't recall how many have said, less for cash, with which I disagree re sharing the tax load when some services are now $100 +/hr, and remind them not willing to risk poor service, faults & no guarantee, without an invoice as proof.

Rhonda
July 11, 2025

How big thinking are we willing to be? How about a same percentage of tax for every level of income - no refunds, no deductions, No Gst Slash the tax department and only have the staff needed to administer the inflow. Much less expense to Government and less angst to the public. Thoughts?

Horace
July 12, 2025

Yes, how willing are we to tip the system on its head??? Sadly it is very obvious the ‘big’ decision makers are scared of getting out of the comfort zone, or is that the vote wining zone? We are so used to fiddling round the edges, it is easier to keep fiddling until one day it all implodes. It is a very depressing situation.
What you are suggesting is what transformed Germany after WW2 and also New Zealand after Muldoon government left the country on the verge of bankruptcy. In both cases the levels of company tax were lowered significantly to a level were it became uneconomical for corporations to use overseas tax havens because it was both simpler and cheaper to retain earnings in country, which benefits everyone. Personal income tax rates were also lowered and a gst / vat was introduced this also proved very effective.
Having friends who emigrated to NZ (and took a very successful business with them) 15 years ago to get away from the complexity of Australia’s business and personal tax reporting, they have never looked back. The amount saved on end of year reporting and other associated costs has been significant as there are no personal tax returns, business returns are simplified (similar to personal with only capital investment / equipment offset). They certainly don’t miss the escalating ‘nightmare’ they left behind.

It is about time the chaff was swept aside and the whole system scrubbed clean and simplified.
The Henry report recommended what needed to be done and should be done.
However, there is no one who has the courage and leadership acumen to put it all on the line and just do it.
Australia is very good at ‘fiddling’ around the edges. It has certainly become very reluctant to take any big bold steps to replace what desperately needs replacing due to the amount of self interested ‘noise’ generated when anything ‘out there’ is recommended.

As was once said by a well known progressive Australian (whose name alludes me at present) in frustration at all the fiddling, “Australia, is certainly the lucky country. Lucky to still be here”.

davidy
July 11, 2025

Frankly I am happy to pay higher GST - it gives me a choice to where I pay tax and it is hard to avoid (the VAT man in the UK is a pretty fearsome enforcer of collecting taxes).

And the argument about inflation - look at your supermarket shop and see how little/no GST you pay (the dockets tell you the amounts).

How else is the Budget going to be ever balanced with increased spend on Defence and the NDIS ?

John mc
July 11, 2025

How about the Government just live within its means. Budget from our tax is 800 bn. Welfare spend is 300 bn. I'm sure there are some savings to be had.

D traverso
July 11, 2025

As with John live with your means !!
Start with making the government much more efficient and look closely at waste and rorting of the system for starters. Then there are cost overruns! Nearly every gov project busts the budget as no one is really held accountable and loses their job. Why do we pay external accountancy firms to do costing for large projects which are so totally hopelessly under budgeted??? Especially defence projects or Victoria’s infrastructure projects! Then there is the ndis which is not fit for its original purpose now at 14% growth in excess. It’s totally down to employing people with very poor judgement who are totally lacking the skills needed to the job and then not being held accountable and having to pay a price for their incompetence!

Richard E
July 11, 2025

Absolutely ?? I reckon a professional external audit would do the trick . The only thing I would increase is defence.

lyn
July 13, 2025

John Mc et al, agree re audit. Has a Govt ever been formally and fully investigated re Time Management by external consultants thus opinion of whether over-staffed or not? Past articles here have brought comments of paying full Govt pension to all and then retrieve any 'overpayment' via Tax Return in order to save on Centrelink staff in pension sections. Has Govt ever done a formal study re this to determine if staff cost savings including its liability for Super makes it viable? The first year would be hard re pension payment budget but at start of 2nd year if staff savings made by that method it may reap huge future savings. Be interesting to know annual man-hours of pension section/pension queries currently. They must have some way of measuring, especially the phone calls we are lead to believe it deals with.
In difficult times such as now, taxpapers should have right to know what such costs are rather than as if it's a national secret.

Andrew
July 11, 2025

There are many valid points being raised in the comments demonstrating that this is a tricky problem. It would be great if governments could put aside the political arguments and instead focus on the economic imperatives. I am no expert, but see the following issues:
i) Low productivity (and few incentives for increasing it - for example, companies are often reluctant to invest in R&D or improved systems that could improve productivity as they are beholden to returning a huge percentage of profits to shareholders)
ii) Far too little paid by the companies for extracting our natural resources
iii) Government incapable of managing large infrastructure projects without going over budget (often double or triple) - admittedly this seems common around the world
iv) Aging infrastructure, particularly electricity distribution.
v) Struggling health, aged care and education systems.

Much of this is in the hands of State governments who would directly benefit from an increase in GST and, as others have said, we have one of the lowest in the world as well as some of the lowest effective company tax rates.
Superannuation and the tax system have both suffered from incremental tweaking which has led us to a "dog's breakfast" of rules and conditions.
Maybe a step towards a solution would be to increase the GST to 15% (possibly keep only fresh food exempt) and simplify all the other tax frameworks to reduce the various ways companies and individuals can "play the system". Superannuation is a great concept in removing the demand on government pensions, but the open ended maximum balance has turned it into a wealth accumulation strategy.
Income tax bands do not encourage extra effort for middle income earners. Exploring a flatter tax model with wider bands could make it simpler and fairer.
So, Jim Chalmers, by all means establish a legacy through tax reform, but also look at spending reforms, government efficiencies and equity for individuals, companies and investments.

Josh
July 11, 2025

I like your thinking Andrew, especially the but about capping super and getting rid of the tangle of laws needed to stop it being rorted.

If super was capped at, say, 10x the average income, we wouldn't need all these laws to deal with people who've stuffed millions into it. Just cap it, make the rules simple, and then gradually get people to withdraw any assets above the cap.

x10 the average is plenty for a "dignified requirement". If you want more, save it outside of super.

Izzy
July 11, 2025

I think we need to look into Australian government spending . It has gone unseen for many moons and many believe there incompetent behaviours.
We are a family of 4, i and wife work and we live week by week , no insurance, no paid TV , no pets, one old car, want to eat healthy which is so expensive, $3500 month rent.
And the government gives themselves a pay rise because " cost of living " what a joke.
Really is a slap in the face.
I believe the fault is in our government, roads are terrible, schools are old, streets are unsafe. I stress about it everyday .

Clayton M
July 11, 2025

The cost of living crisis is easily resolved,increase the minimum wage by 50% and stop thinking that the majority of Australians are going to put up with this shite forever,impoverishing the majority.
The last 3 years have completely destroyed retirement plans,living standards for low to middle class and placed people into an unmanageable level of anxiety
Then we have AI,what career does a young person choose
Start thinking human otherwise we are going to get rid of the power making this crisis for forever

CC
July 11, 2025

and forget about inflation ? ....... 50%, good grief !

GeorgeB
July 14, 2025

Government spending to support the economy during the Covid pandemic was unprecedented and so are its aftermaths. According to Chatgpt combined national and sub-national economic support spending exceeded A$325?billion, with health-sector outlays making up at least A$40?billion+ of that total. We may now be witnessing payback time.

GeorgeB
July 11, 2025

In the late 1990s I recall many arguing against an introduction of the GST precisely on the ground that governments could not be trusted not to increase it whenever they ran short of a buck.
In any event consumers have already been dealt a cost of living blowout due to post COVID inflation running at more than 22% cumulative, which is the equivalent to raising the GST to more than 30%. Given that reality, I suspect that many consumers would say "enough is enough".
Any increase in GST will also have a disproportionate impact on retirees savings which cannot be compensated by a reduction in income taxes.

John
July 11, 2025

Instead of increasing taxes maybe we should be cutting back wasteful services.
With NDIS every invalid in Australia has got a full time tax payer paid butler.
The government has to rein in its spending and live within its means.

Olly
July 11, 2025

Agree

Phil
July 11, 2025

They should be looking at all the NDIS providers that have sprung up. So many are overcharging and under providing. Most wouldn't be in it if there wasn't good money to be made.

One way forward
July 11, 2025

The Basics of Land Value Tax: A Simple Breakdown

So, what exactly is a land value tax? At its core, it’s a tax imposed on the value of land itself rather than the buildings or improvements made on that land. This means that if you own a plot of land in a bustling urban area, you would pay taxes based on the market value of that land alone, regardless of what you’ve built on it. The rationale is that land value is influenced by community factors like infrastructure, schools, and public services, which should benefit everyone, not just landowners.

One of the key benefits of LVT is that it encourages efficient land use. By taxing land value, owners are incentivized to develop underutilized or vacant land. If the tax is lower than the potential profit from developing the land, property owners are more likely to invest in construction or renovation. This could lead to more housing options, parks, and commercial spaces, addressing the needs of growing populations in urban areas.

Moreover, a land value tax could significantly reduce the financial burden on working-class citizens. Since the tax is levied on land value, it would lower the tax burden on labor and capital, encouraging more job creation and economic activity. As cities grapple with the challenges of providing affordable housing and sustainable development, adopting an LVT framework could pave the way for a fairer and more prosperous community.

Implementing a land value tax could have transformative effects on urban environments. For starters, it can lead to a more equitable distribution of wealth. By ensuring that landowners contribute their fair share to the community, LVT can provide much-needed funding for public services like education, transportation, and infrastructure. This not only raises revenue but also fosters a sense of shared responsibility among citizens.

Additionally, LVT can combat urban sprawl by promoting higher-density development. With the incentive to maximize land use, cities could see a shift towards more vertical living arrangements, reducing the need to encroach upon natural spaces and agricultural land on the outskirts. This aligns with modern sustainability goals and can help mitigate climate change impacts by encouraging public transit use and reducing reliance on cars.

Finally, LVT can empower local governments to make long-term investments in their communities. With a stable revenue source, cities can plan for future growth and invest in amenities that enhance the quality of life for residents. From parks to affordable housing initiatives, the possibilities are vast. In essence, a land value tax isn’t just a financial mechanism; it’s a tool for social change that can reshape how we envision and live in our cities.

Peter .C
July 13, 2025

So what’s happens when you’re not in a position to pay it ?? , you never own your house etc because after mortgage payments, rates, insurance bills and the like that’s is nothing left. Your property has a caveat on it for ever until sold , plenty to pensioners/ first home buyers could never afford it.Rents go up the day it’s implemented.
What taxes would you cut to offset this. Thanks for your thoughts.

David
July 11, 2025

Noel states the issue with inflation: "And unless inflation is factored in, removing the discount would breach a fundamental tax principle: you shouldn’t tax inflationary gains." Wouldn't it be nice if this was actually enshrined in the constitution. I see little evidence of this principle applied in practice. On the contrary, all governments of all political persuasions exploit inflation mercilessly. Ranging from non-indexation of the 2012 set tax thresholds to taxing as income bank interest on deposits, without allowing for inflation, and non indexation of cost base in CGT calculations, the practice is rife. Unfortunately if the principle were applied consistently, the tax collected would probably halve. Cruel, but fair! My favorite quote from the British economist, John Maynard Keynes is: " By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens."

GeorgeB
July 11, 2025

"By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens."

I think you have just explained why the Reserve Bank of Australia (RBA) has a target inflation rate of 2 to 3 percent.

Jack
July 11, 2025

The alternative is deflation where prices get cheaper. Then why would anyone spend today if they expect lower prices tomorrow. Because we live in an economy where my income depends on your spending, that would be a problem.

Dudley
July 11, 2025

"The alternative is deflation where prices get cheaper. Then why would anyone spend today if they expect lower prices tomorrow. Because we live in an economy where my income depends on your spending, that would be a problem.":

Increased productivity results in price deflation, which results in more demand.

Decreased productivity results in price inflation, which results in less demand.

Where money supply is constant.

David
July 12, 2025

In reply to those who think continued inflation is a good thing, I quote Henry Haslitt :
"Inflation is not only unnecessary for economic growth. As long as it exists it is the enemy of economic growth."
I also note the modern computer industry where the price of computers has continually fallen for many years, as the power of each computer has grown. Has this made the people of Silicon Valley any poorer?

Francis H
July 11, 2025

The GST was always a con job, a typical pea and thimble trick. It is a regressive tax and hits lower and middle income earners harder. The original justification was to allow big reductions of income tax. How did that work out ? We are having the same debates again because income tax thresholds were never indexed. Income tax as a concept is supposedly unfair. It is not. It is a progressive tax and should be applauded as the best system there is. The GST should have been introduced in return for indexation of the tax scales to wage increases.
Far better to return super in retirement phase to what is was pre 2007, return capital gains tax to discounting for CPI only, include all assets in the aged pension assets test including the family home based on land valuation by the respective states, minimum tax on trust distributions at 30%, negative gearing losses against income from the geared asset only and reform tax deductions for work expenses significantly.

Stephen
July 11, 2025

If we are talking about tax reform it's probably a good idea to define the problems before leaping into supposed fixes.

Obvious problems are, the imbalance of Federal government expenditure over revenues and the high burden of tax on income (individual and corporate).

However Australia is a nation that has a relatively low tax on consumption and low taxes on capital gains, passive income and the resources industry (via superannuation, negative gearing, franking credits and low royalty payments and excessive production tax credits).

Raising the GST would be highly regressive as lower income people spend more of their income on consumption. A substantial percentage of the revenue raised would have to be recirculated back in compensation for those on low and fixed incomes.

Tax reform is going to need much more than just raising the GST. To gain political support any raise in the GST would need to be accompanied by tax changes to high super balances, a reduction in capital gains tax concessions, the curbing of negative gearing and an increase to the low tax take from our natural resources.

On most international measures our GST is low. But our negative gearing and capital gains tax regimes are world leading in their generosity, few countries allow a full imputation system as Australia does and no country with bountiful natural resources gives them away for so little as Australia. Singling out GST as the magic potion to fix all our tax and budgetary ills falls far short on economics and is a non starter politically.

The problem with Noel's suggestion isn't that it is too brave. It's that it is too timid.



Syd Buckle
July 11, 2025

Remove negative gearing this would probably solve the housing crisis at the same time..If the GST goes up to 15%...just had a repair on my car with $80 GST ,That would be an extra $40 on that cost...Electric, gas extra 5% GST..
Car rego Stamp Duty and GST....It just goes on and on...The Albanese brilliant $360 BILLION AUKUS deal will put Australia in Debt for decades, that it doesn't need....think the amount could be spent more sensibly elsewhere...

Bab
July 11, 2025

The AUKUS deal was DONE by Morrison government! They cancelled deal with France at huge buy out cost.

KIm
July 10, 2025

When we look at other countries' GST or VAT levels, Australia is in the lowest band. UK + 20%, and New Zealand I think is 15%. So the GST here could be raised in steps - say 12.5% (easy to divide by 8) and then 15% in need to pay for Defence requirements (5% of GDP). However, I am averse to letting the Government having more income to play with, as I'm sure it would not be spent where needed, just "pork barelled" around chosen electorates. Not national building because that is too sensible.

Nadal
July 11, 2025

If I asked my teenage children to divide 900 by 8, they would struggle, without reaching for a calculator. Sad indictment of the education system over the last few decades. (I suspect they would be able to do 800/8 ok, but 400/8 would probably go for a calculator again!).

Mr_Tee
July 10, 2025

A couple of observations from me:

1. The current arrangements with the GST involve all of the states getting the GST revenue. Therefore, increasing and/or broadening the GST would see all of that increased revenue flowing to the states with nothing for the federal government.

Unless the federal government was able to renegotiate the current legislation with the states so that some of the GST can remain at the federal level. And of course, every rent seeking state premier and treasurer will crawl the walls of Canberra protesting this and wanting even more.

The best the Federal government could hope for is that the states get to keep what they already get being the 10% including the 0% rated excluded items in the basket of goods and services. The federal government gets the 5% extra on the current taxed basket as well as the 15% on the current untaxed basket.

But then compensation will need to be paid to the low income earners and social security recipients. The states won’t pay it. The feds will have to pay it out of that smaller pot of cash outlined above. I don’t have the numbers to work out what might be left after all this accounting and compensation but I doubt that it would be much.

But if it could be made to work without the politics getting it bogged down, I’d support it, subject to…..

2. It’s all good and well to talk about broadening the tax base and increasing the tax rates…….but for what purpose? What is the great big national initiative and imperative that requires the federal government to tax us all more? If there is no compelling answer to this then why do it at all?

The government, at state and federal level, have more of a spending problem, not a revenue problem. Cut state and government spending to drive efficiency as the first 9 priority items on a 10 point priority list.

James#
July 10, 2025

Get real! Never going to happen under this government. Albo is already adamant that there will be no change to the GST. Any real reform like this would damage his chances of surpassing Hawk and Keating as a Labor legend (in his mind anyway). He needs a 3rd term, so we'll get more of the bland same fence sitting on everything. The only area Labor is really interested in targeting is wealth.......of people that already mostly don't vote Labor!

Les
July 11, 2025

So true. Adding another 5% to the cost of living would be catastrophic for young families in particular. Ridiculous proposal.
How about running a DOGE through Government expenditure rather just raise taxes. Fat chance of that happening under Albo

Nick Callil
July 10, 2025

Thanks Noel. There is much appeal in simplifying the GST to remove all exclusions that were negotiated to get it over the line a generation ago. We undervalue the deadweight cost of inefficient exclusions and exemptions in the tax system. Of course there would need to compensation to smooth this transition.

Interesting to look at the effect on revenue of the two proposed changes to GST - using Treasury's tax expenditure numbers (which ignores behavioural changes, and also continuing to leave out financial services), I estimate the revenue impacts (in $bn) as

Current GST 88,651
Remove exemptions +25,900 (+29%)
Increase to 15% +57,276 (+65%)
New GST 171,827 (+94%)

Even removing exemptions alone would be worthwhile, perhaps in advance of an increase in the rate if doing both at once were seen as too big a bite.

DW
July 10, 2025

The art of taxation consists of plucking the golden goose so as to obtain the most possible amount of feathers with the least possible amount of hissing.

John Wilson
July 10, 2025

One ofthe few things I agree with Keating about is indexation of asset cost base with inflation. Getting 50% discount 366 days after purchase but zero after 364 days, as introduced by Costello, is stupid. What the 50% discount encourages is disposing of investments in a relatively short time, but not before 1 year.

This ought to be a relatively easy fix, as was introduction of the 50% discount scheme: just require new purchases to follow the indexation scheme, and for existing assets, taxpayers can use whichever scheme is more attractive.
Depending on inflation rate, the 50% discount scheme will eventiually cease. Indexation wasn't, and wouldn't be an administrative burden.
Just do it Treasurer!

Mark Fiora
July 10, 2025

Real Reform needs Real leadership .
The practical solution is to lift the GST to 15% with no exemptions , compensate most adversely effected for a period.

And Cut the bad incentives (Bracket creep get rid of the bracket its a disincentive for people to be more productive .
Once a person earns $135,000, they lose 39% of every extra dollar. That jumps to 47% after $190,000.

Australia Desperately needs to lift productivity ( get rid of the disincentives) Keep it simple

Mark
July 10, 2025

Let's hit the low income workers again!!!
Pathetic.
And no I'm not one.
How about this????
EVERY level of government start paying reasonable and fair prices for infrastructure across this entire country instead of overpriced and under delivered projects across the board.
Blind Freddy should be able to see that the exorbitant planning and delivery costs of projects are nothing short of ripoffs.
The savings if this occured might actually mean that people wouldn't need to be taxed more.

fedup
July 11, 2025

low income earners hardly pay any tax and get all the govt hand outs. why should the entire economy be propped up by people who choose to work hard and be successful?

The other suggestion - eradicate cash. the shadow ecoonomy costs us $50b a year in lost taxation and is nothing short of tax evasion. eradicating cash will make it way harder for people to do 'cashies' and avoid paying tax on their income.

Johns
July 10, 2025

Hst is a regressive tax. Rather than raising the rate and widening the base it should be eliminated altogether recognising that its regressive nature makes it a bad tax.

Retirees should be vocal in their opposition to raising the gst. Retirees learnt their income, paid income tax (at up to 60%) and saved what remained. Gst then taxes that money when it is spent. To be fair, if the gst is to be raised then all savings should receive a government boost, equal to the rate of the gst to compensate people for the loss in purchasing power of their savings

Ian Ross
July 10, 2025

so how does the government then raise more revenue if the GST is eliminated - increase income taxes ?

David
July 10, 2025

The government shouldn't need to raise more revenue. When Chalmers talks of productivity and efficiency gains he's always talking about business. If he turned the focus onto government spending he might be able to live within his means (like the rest of us have to).

Geoff
July 10, 2025

Simplistic argument using terms which have now managed to have emotional content attached to them - regressive = bad and progressive = good, automatically these days, without any thought being applied. Everyone earning money, however it is acquired, should pay some tax and have some skin in the game that is their country's continued financing.

I'm a retiree and I would support a 15% GST and removing the exemptions that currently burden it over other "revenue improvement" strategies given the government doesn't have the appetite/will to reign in spending, because it's pretty much the only tax I directly pay. I find myself in the ridiculous position of earning more, after tax (because I don't pay any) now than I'm retired, than I did when I was working thanks to tax-free super and franking credits. It's simply not sustainable - I could live another 30 years yet, and I keep waiting for someone in power to do something about it.

15% GST and I might feel like I'm still contributing.

Mark S
July 13, 2025

Geoff, you ALMOST got it right but you need to remember that Australia is a very expensive place to live and is already right up there in the rankings for the world's heaviest overall taxed countries. We need to closely examine the quality of our spending, especially nationally where we are experiencing absolutely massive blow outs in infrastructure projects as well as public service expansion that is difficult to justify.
At it's heart, our outdated taxation system would continue to cope if government expenditure was properly managed. But that is much harder than collecting higher taxes which ironically comes with a very high price itself. The whole mindset is wrong with this ideology and we are headed straight to the cliff face if we continue down this path.
As for not paying enough tax, just consume more. Make your money go round. It's good for everyone including Treasury. Just remember that the impression of fairness is paramount and fairness can have pretty broad individual interpretations. Also worth remembering is to be very careful about what you wish for. Would you trust politicians and their bureaucrats to fix your "undertaxing" problem? Think about it....

GT
July 10, 2025

most comments in these articles leave self interest aside. Yours is not one of them. If you want to whine about a proposal someone is making then come up with an alternative of your own that involves more than just a NIMBY response. This is a complex issue that will require bravery, otherwise we'll just continue to muddle along.

Michael
July 10, 2025

A 15% GST would hurt low income earners already struggling with the cost of living more then high income earners and there are more low income voters.

John
July 10, 2025

Low income earners would have to be compensated and I am sure there are many ways this could be done. But a increase in GST is a good idea.

jim kiernan
July 10, 2025

Increasing GST is the quick, simple and efficient way to increase tax revenue as we have one of the lowest rates in the world. However, food needs to remain exempt. Personal income tax needs an overhaul but will require much debate.

Rv
July 12, 2025

Hey guys..... you're missing the point.
The Australian GST is a tax to be distributed to the states.

CC
July 14, 2025

currently I am paying an overall personal income tax rate of 41%.
little incentive for me to work harder therefore I decline offers to do so.
a rise in GST should require an overhaul of excessive personal income tax in this country but I wouldn't
hold my breath on it.

Ian
July 14, 2025

At one stage I was paying a marginal income tax rate of around 66% or so. Not worth busting a gut for the net income so I left Australia to work and contribute elsewhere. Many others I know have done the same. Feds lost a lot of productivity and tax.

Dudley
July 15, 2025

"overall personal income tax rate of 41%":

Gross $500,000, tax $205,638, marginal 47%.

Incorporate as trading / investment base rate entity 25%, sell product not labour, draw minimal wages.

 

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