Finance Finance News Tax reforms could save Govt $37 billion

Tax reforms could save Govt $37 billion

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An independent think-tank says it has come up with a package of reforms that could add around $37 billion a year to the bottom line of Australian government budgets.

The package includes broadening the GST net to include fresh food and private spending on health and education, as well as a lifting of the age at which you access the pension or superannuation to 70.

The proposal, released by the Grattan Institute, also suggests owner-occupied housing be included in the assets test for the aged pension.

The proposal follows a call from the Productivity Commission last week to raise the pension age to 70.

Grattan Institute CEO John Daley says they are tough decisions but need to be seriously considered.

“It would essentially bring our budgets back into black in a sustainable way for at least the next couple of years,” he said.

“Given the long-term pressures we’re probably going to have to do other things into the future but it would at least stabilise us given the substantial underlying deficits we’re running at the moment.”

Mr Daley says widening the GST net would also benefit the budget bottom line of state governments which receive that revenue.

“State government budgets are also under enormous pressure,” he said.

“And one of the problems that the states have got is that most of the tax bases they have are not great tax bases.

“If they increase those taxes that will tend to reduce the amount people want to work, and the amount people want to invest.

“And that’s why although we hate raising taxes, broadening the GST is a better way of doing it than most others.”