The federal government could raise the Goods and Services Tax (GST) without harming low income earners, a new report by economic experts reveals.
Deloitte Access Economics research suggested the government could save $30 billion through changes, hoping to add some urgency to the debate about tax reform by addressing some of the “misconceptions”.
The report modelled raising the GST to 15 per cent and also examined raising the tax to 12.5 per cent and broadening the base to include fresh food.
Deloitte Access Economics partner Chris Richardson told the ABC’s AM program “of course” the GST could be raised without harming low income earners.
“Yes, if you raise more money from the GST the poor will be worse off, but that isn’t the end of a conversation, that’s the start of a conversation,” Mr Richardson said.
“We allowed enough compensation to make sure the poorest Australian families were actually better off, rather than worse off, and you were getting, under one scenario, an extra $30 billion a year.
“Under the other scenario, an extra $20 billion a year. That’s big bucks.”
The report also suggested cutting the company tax rate as a way to boost investment, wages and living standards, even if the budget remained in deficit.
Mr Richardson said a broad package of changes to make the tax system more efficient could give the economy a significant boost but that the current political climate was not helping.
“The politics at the moment are really frustrating, as both sides happily throttle each other rather than focusing as much as they should on running the country,” he told the ABC’s AM program.
“You’ve got all these people running around saying the great reform age was the 1980s and perhaps the 1990s and we can’t do that anymore — yes we can.
“You do a big enough tax reform package and you can generate a really substantial boost to Australia’s living standards.”