Health, education could get GST
Mr Tehan said protecting LGBTI students from discrimination was a top priority. Photo: AAP
Private school fees and health insurance should be hit with a 10 per cent Goods and Services Tax in an attempt to boost the nations revenue, according to a report released on Thursday.
Key research group The Australia Institute supports the idea of widening the GST to some health and education services, veering away from longstanding objections to any change to the consumption tax.
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The report ‘How to extend the GST without hurting the poor‘ looks at the potential gains and impacts involved from extending the GST to private schools and private health insurance.
As the predominant consumers of private schools and private health insurance were higher-income households, it said broadening the GST to include taxes on these services could raise $2.3 billion per year in additional revenue without heavily impacting upon low-income earners.
The proposal showed that the Mid-Year Economic and Fiscal Outlook (MYEFO) has revealed $28 billion in revenue write-downs, signalling even tougher times ahead for government in trying to bring the budget back to surplus.
This week Victorian Liberal backbencher Dan Tehan reignited the GST debate, saying it should be broadened to include things like fresh food, health and education, as the first step in making the tax system more efficient.
“If we keep penalising people through higher income tax rates and higher company tax rates, that will not enable our economy to continue to grow and for us to be able to provide the services that Australians expect,” Mr Tehan told ABC News Radio.
“We should look at things like food, like health, like education and see whether it is better to apply the GST to those sectors of the economy like they do in New Zealand, where 96 per cent of what is consumed is captured by the GST.
“Then you look at providing direct relief to those on fixed incomes and you also look at reducing your income tax and your company tax rates.”
The Australia Institute’s proposal, to be submitted to the Federal Government’s tax review, draws on work by the National Centre for Social and Economic Modelling to estimate that only nine per cent of the revenue from the GST change would come from the poorest 20 per cent of households.
The report concluded that the budget has a revenue problem, and broadening the GST to private schools and private health insurance was the first step towards plugging the revenue hole.
