Economist blames baby boomers for ‘inevitable’ GST increase

An increase in the goods and services tax from 10 per cent to 15 per cent is “inevitable” according to

An increase in the goods and services tax from 10 per cent to 15 per cent is “inevitable” according to one of Australia’s leading economists.

Craig James, Commsec chief economist, says the country’s ageing population would be the catalyst for the increase, but he says it is unlikely to occur until after the Federal election.

“GST must play a bigger role. We have to increase it to see income tax rates come down,” James told The Sunday Times in Perth.

“[An] incentive for people to stay in the workforce is to push income tax rates down.”

He says Australia is looking at a smaller proportion of people in the workforce supporting a larger proportion of retirees.

James says the next parliament would need to focus on a fairer system for redistributing GST receipts.

Raising the GST is contentious enough an issue in Australia without broadening the base to things like fruit and vegetables. However, a discussion does need to be had and leadership on the issue is required.

Reform is needed to sustain services for the ageing population.

How do you think Australia can maintain tax levels? Is it fair to lay blame at an ageing population?

  1. What type of economist predicts an increase in the GST. The GST distorts costs from manufacturers to the consumers. Every time an item is bought and sold the GST is applied. The so called 10% can be applied four time before the consumer pays the last 10% on the compound amount.
    Before the GST is increased many other changes should be done to reduce the pressure of tax collection. The big end of town to pay their taxes. Reduction in the remuneration of politicians and all over paid fonctionnaires, Increase the base from where the existing GST is drawn, These modern economist want to be celebrities before they do their research .
    Holland increased their GST and found the collections became less because it forced a black market for goods and services. Not the desired result.

  2. Terence Tovey  

    The older generation not only paid their share of income tax but also got clobbered with the GST
    As well. The Current generation don’t want to work only live off Social Benefits and enjoy all that
    The Baby Boomers created for them.
    Call yourself an Economist perhaps you would be better informed if you looked at Government waste.
    Everyone blames the aged but has no ideas to fix Expenditure only raise and blame the Pensioners.

  3. Rhonda De Stefano  

    There are basic flaws with this economist’s premise that lowering income tax rates would be an incentive for older workers to remain in the workforce. Many older people who retire do so because they are beginning to age (poor sleep, joint pain, lower energy levels) and find that they can no longer cope with early starts, long commutes and a 40 hour week. Others are victims of ageism and are no longer able to get a job. Unfortunately there are not enough jobs for everyone these days as industries shut down, businesses move offshore and overseas workers are brought in. Some want to have a better quality of life after working for 45+ years. I feel that lowering the income tax rate would change none of this. The real problem is that our economy is “broken” – younger people are out of work, we import too much and our reserve bank fiddles unnecessarily with interest rates!

  4. Henry  

    The economists today, who blame baby boomers for ‘inevitable’ GST increase are stupid, shallow minded, good for nothing lazy degenerates possibly addicted to prohibitive drugs that has shrunken their brains.

  5. Barb  

    We all apologise profusely for getting older every day. We will have to stop doing that.

  6. GST was increased, here in New Zealand many years ago to 12.5 percent. There are no exempt items, including basic foodstuff. Now waiting for this Tory government to announce a further increase with this news out of Australia.

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