We can talk about a higher rate of GST in Australia, but it will never happen

30 Aug 2023

John Quiggin writes for The Conversation. |  Follow John on Twitter

A group of crossbench parliamentarians have revived the idea of increasing the rate of the goods and services tax from 10% or removing exemptions on food, education and health purchases.

Signage on the door of a polling station.

The group, which includes Allegra Spender and David Pocock, say increasing the GST rate would raise revenue to lessen government dependence on income tax as the population ages.

Raising more from the GST is among the perennial candidates. In 2015 then treasurer Joe Hockey floated the idea but quickly abandoned it.

It can safely be predicted that this latest push from the crossbench will go the same way – nowhere.

Premiers must agree to rate change

The reason dates back to the debate over introducing the GST in the late 1990s, when opponents predicted the 10% rate would soon be raised, as had happened in New Zealand in the 1980s.

Then prime minister John Howard staved off this objection by designing the GST legislation so any increase in the rate required the unanimous support of all state and territory governments, as well as both houses of the federal parliament.

Getting such agreement is virtually impossible, as Hockey discovered. Even in the unlikely event of an agreement in principle, disputes over how the extra revenue should be shared would almost certainly derail any deal.

Read the full article in The Conversation