Treasurer Scott Morrison has described reports that the government is considering a hike in the GST as “speculative” but economists and tax practitioners say it’s an idea worth pursuing.
Mr Morrison says fixing the tax system is not about trying to increase the tax burden on Australians to chase ever higher levels of spending, but about encouraging growth.
“The Commonwealth and states and territories are looking for the best mix of options that are going to encourage jobs growth and economic growth,” Mr Morrison told AAP on Sunday.
The treasurer was responding to a News Limited report that said the government was considering raising the GST from 10 per cent to 15 per cent while reducing tax for middle-income earners and keeping fresh food GST-free.
Economist Chris Richardson said a conversation about the GST is a good place to start the tax reform process.
“But you must compensate,” the Deloitte Access Economics economist told Sky News.
Accountants CPA Australia chief executive Alex Malley said it’s widely recognised that the GST needs to be looked at.
“It is the packaging of changes to the GST with the removal of other taxes that is critical, and is so often missing when it comes to the GST debate,” he told AAP.
However, Opposition Leader Bill Shorten can’t understand why the government believes raising the GST will solve Australia’s problems.
“I think it’s the wrong idea for confidence, for families trying to make ends meet,” Mr Shorten told reporters in Melbourne.
Labor’s finance spokesman Tony Burke said the government is focusing on taxing lower and middle income households rather than addressing high income superannuation concessions and multinational tax avoidance.
Cabinet Secretary Arthur Sinodinos said any changes to the tax mix must be in tandem with reining in government spending “more and more”.
“Unless we reform spending, there is no way you can keep tax down,” he told Sky News.
But he is confident Australia can retain its AAA credit rating, saying he doesn’t believe the nation’s debt is at a point that would impact on the top-tier rating.
Part of the ongoing budget process are flagged changes to childcare aimed at increasing workforce participation.
Education Minister Simon Birmingham said he was making no apologies for working out ways to help low and middle income earners so they can work and increase their hours.
But the detail of any changes had not yet been finalised.
“Average Australian families who work, study or volunteer will be significantly better off under these reforms,” Senator Birmingham promised.
Labor’s childcare spokeswoman Kate Ellis said 21 months and three ministers after launching a Productivity Commission review, the Liberals still can’t tell Australian families what is happening with their childcare changes.