By Denis Hay
Description
Broader GST reform in Australia may seem fair but could hurt low-income Australians. Explore who really benefits – and smarter alternatives.
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Problem – Kingaroy, dawn, July 2025
Sarah, a single mum, scans supermarket aisles for fresh fruit she can still afford. Rumours swirl of a higher, broader Goods and Services Tax (GST) that could make even bread dearer.
Why it hurts: For families like Sarah’s, every cent counts; a two‑point GST rise means skipping school excursions or power bills.
Solution – What’s ahead: We’ll test CPA Australia’s push for GST reform in Australia against lived experience, economic evidence, and – crucially – Australia’s dollar sovereignty.
The Proposal: CPA Australia’s Call for “Generational” Reform
On the GST’s 25th birthday, CPA Australia urged Canberra and the states to broaden the base – currently riddled with exemptions – and consider lifting the 10 % rate. Proponents say Australia relies too heavily on income tax (~49% of federal revenue vs. 24% OECD average) and that consumption taxes are efficient and hard to dodge.
Who’s Behind the Push? CPA Australia and the Business Council
CPA Australia is one of the world’s largest accounting bodies, representing over 170,000 members. It advocates for a simpler, more “efficient” tax system through broader GST coverage.
The Business Council of Australia (BCA) represents CEOs of the country’s largest corporations. It supports GST reform to lower income and corporate tax rates, which critics argue shifts the tax burden onto consumers to protect profit margins.
Both groups wield significant influence but don’t represent the people most affected – everyday Australians, pensioners, or Indigenous communities.
Who Really Pays? The Regressive Reality
The impact of GST reform in Australia is far from equal – data from the Parliamentary Budget Office shows households in the lowest income decile already spend 12 % of disposable income on GST
“A GST hike is a pay cut you feel at the checkout.” – Cassandra Goldie, ACOSS CEO
Why It Hurts: Cost‑of‑Living Crunch
One of the core concerns with GST reform in Australia is how it would amplify existing cost-of-living pressures, especially for low-income households.
- Polling: 68% of Australians oppose any GST rise (Essential Poll, June 2025).
- Case Study: Remote First Nations communities pay up to 50% more for basics. GST hikes only deepen food insecurity.
Dollar Sovereignty Insight: We Don’t Need the Extra Revenue
Australia, as a sovereign currency issuer, doesn’t need GST to “fund” services. Taxes give value to the dollar and manage inflation. From a Modern Monetary Theory (MMT) perspective, GST reform in Australia isn’t needed to raise revenue.
Fairer Alternatives
Super‑Profits Resource Rent Tax
Tax mining windfalls and reinvest in public services.
Close Profit‑Shifting Loopholes
Multinationals avoid ~$11 billion in taxes annually.
Financial Transactions Micro‑Levy
A 0.05% levy on high-frequency trades would raise billions with no burden on consumers.
Weighing the Scales
- Efficiency vs. Equity: While GST reform in Australia could simplify compliance, without airtight, indexed compensation it entrenches inequality.
- Politics: All states must agree – an unlikely prospect.
- Verdict: The reality is that GST reform in Australia, as currently proposed, would benefit high-income earners while placing a heavier burden on families like Sarah’s.
💬 Question for Readers
Do you believe GST reform in Australia is necessary – or are there fairer ways to fund public services without increasing the burden on everyday Australians?
Q&A: Reader Concerns Addressed
Q1: Is a 2% GST rise that painful?
Yes – $1,400/year extra for low-income families.
Q2: Can compensation schemes solve it?
Only temporarily. Indexation lags reduce value over time.
Q3: Do businesses benefit?
Under proposed GST reform in Australia, larger firms gain while micro-enterprises face higher prices on inputs and tech upgrades.
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This article was originally published on Social Justice Australia
Also by Denis Hay:
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what about self funded retirees will there be any compensation for us if the GST is increased? or will we just have to put up with a lower standard of living in our golden years?
Its the Tax loopholes that should be closed, and some also like Neg gearing paired back. But as we found out that was tried when Shorten was running for Gov. Greed won over common sense. Aided by a feral press.
It’s always the easy target, instead of the real villain.
Close deductions for high income earners – their tax should be taken at source the same as PAYG and over $400k deductions should phase out to ZERO at $1mill. These people do NOT need any tax relief !!
Negative gearing on ONE property only. That protects the small investors saving for retirement and stops handing free cash to people with up to 10 properties.
At present the people lowest on the pole pay the most tax. Adding more is NOT going to help them.
GST is a regressive tax and any increase would have to be accompanied by compensation to low-income groups including pensioners – forget it !.
What we need is A tax on financial transactions [an FTT or “Tobin” tax] on all financial Bond and Stock Market transactions which would generate tax revenue and improve the operation of Australia’s capital markets and be difficult to evade.
The EU are moving towards a consistent Financial Transactions Tax over all member countries, we would be well advised to observe what they do.
‘Proponents say Australia relies too heavily on income tax (~49% of federal revenue vs. 24% OECD average) and that consumption taxes are efficient and hard to dodge.’
Like to know which OECD nations they compare with, guess US, UK, Ireland & low tax nations outside developed nations? The US and UK have been under the influence of Atlas Koch Network a la IPA.
Further, with more retirees needing budget support vs fewer working age, PAYE may become limited, but our high border churn of temporary & short/medium term residents (mislabelled as immigrants), contribute much revenue (you’d never know from the media dog whistling).
These so called ‘immigrants’ eg. international students* & backpackers with insurance and no access to social security, are part of the solution and also a global competition for growth in aggregate demand for services, consumption/GST and income/PAYE taxes.
*Neither the US nor Australia, which follow same Tanton Network white Christian nationalism (see SusPopAus & RW MSM), seem to want to severely restrict international students, as a way to attack universities’ revenue; ditto unsubstantiated and Orwellian allegations of campus anti-semitism.
Another solution is more compliance audits; clue came from one’s own accountant tax newsletter promoting ‘Audit Guard’ insurance; think maybe govt. and ATO warned the CPA of their plans?
The mainstream political parties, Labor and lnP are too reliant on their donations from all the big players to be able to tax them effectively. Hence finding ways to soak even more those they should be supporting but whose only influence comes at election time
Agreed a Financial Debits Tax (FDT) is the way to go. At the same time we should abolish tax exemptions.
Increasing the GST rate is the last thing that should be done. What I want to see first is that the government make the tax system as a whole FAIR for EVERYONE.
Shut down all those so-called loopholes that allow so many rich people to avoid paying tax. There should be none at all, no exemptions, no family trusts, no tax return claims, no tax free charities, nothing. Zero claims, everyone submits their tax return, they earned X amount and pay X amount of tax. Simple.
There is sooooooo much taxable money that just goes “missing” from taxable income that alone would probably solve most of the problems.
And don’t get me started on business taxes, tax havens and the whole deal about shuffling money around the world to avoid the fair payment of taxes. A company earns X amount in this country, they pay X amount of tax in this country on that amount. Simple.
Governments need to grow some balls and stop taxing the shit out of the likes of you and me and actually get serious about going after those that pay sweet FA whilst reaping all the benefits.