New modelling from the Grattan Institute has show that increasing the GST to 15 per cent could generate as much as $27 billion annually for the Federal Government, and also benefit the lowest income earners in Australia, i.e. pensioners.
The Institute has suggested tax tradeoffs for low-income households, and that the model shows the poorest 20 per cent of households will be fully compensated for higher tax
Grattan Institute chief executive John Daly told the ABC, “People in the bottom 20 per cent would actually be in a better position than they are today,” he said.
“They would have more money to spend and after accounting for the GST, they would be able to buy more with the income they have than they can today”.
Prime Minister Malcolm has kept quiet on whether the GST will definitely be implemented, but it has been strongly suggested that it is inevitable.
The Grattan modelling found that a higher GST would impact more on higher-income households, with the top 20 per cent of households paying an additional $26 per $1,000, as opposed to the $25 payment by the lowest income households.
Mr Daly said the research make Labor reconsider their opposition to increasing the GST, because the lower income families will be better off in the long run.
“The assumption is that raising the GST would be regressive,” he said.
“If you change tax rates for people on lower incomes, many of those people are working part time, and the amount that they get to take home after tax and welfare is a material component of their decision to work an extra hour or not”.
So we want to know your thoughts today: Do you really think you’ll be better off with a GST increase? Are you worried at all about how far your dollar will stretch?