Tax reform must include GST: economist (8 Aug 2025)
Article summary: Calls for a broad overhaul of Australia’s tax system have intensified ahead of the Albanese government’s upcoming economic roundtable, with economists and independent politicians urging bold action to address revenue sustainability and workforce pressures. A central focus of this debate is a potential increase in the goods and services tax (GST), currently set at 10 per cent, as part of a comprehensive reform package that balances revenue-raising with fairness and economic growth.
AMP chief economist Shane Oliver has voiced support for lifting the GST to 15 per cent, but stressed the importance of implementing this change alongside reductions in income tax to protect low and middle-income earners. "It's very important it all comes together as a package, because just changing tax concessions will disincentivise income workers," Oliver said. He warned that without such balance, the roundtable risks becoming a vehicle for tax increases rather than genuine structural reform. He also suggested that changes to negative gearing and capital gains tax concessions could be viable if income tax burdens were simultaneously eased.
Independent MP for Curtin, Kate Chaney, has also entered the debate, advocating for a "progressive GST model" to underpin more equitable and effective tax reform. As part of her vision to reinvigorate productivity and shore up the federal budget, Chaney is backing proposals developed by economist Richard Holden. Holden’s model proposes lifting the GST to 15 per cent while broadening its base to include previously exempt essentials like certain foods, education, and health services. Crucially, the proposal includes a rebate of $3300 for every Australian adult, effectively offsetting GST paid on the first $22,000 of annual spending.
The proposed changes are expected to have a significant fiscal impact. Although the GST-free threshold would cost the Commonwealth $68.8 billion in revenue, expanding the GST base and lifting the rate would generate an estimated $92.7 billion, resulting in a net budget boost of $23.9 billion.
Chaney criticised the reluctance of major parties to engage with comprehensive revenue reform. “The major parties like to talk about tax cuts and spending but they're less willing to discuss where the money will come from,” she said. “We have to have courageous conversations about other revenue sources to avoid handballing this problem to future generations."
Prime Minister Anthony Albanese has downplayed suggestions of imminent tax reform beyond existing policy commitments. “Our tax policy – the only tax policy that we're implementing – is the one that we took to the election ... which is reducing income taxes,” he said in Melbourne.
Related article: The Teals push for broader tax reform (30 Jan 2024)
