CPA Australia: GST modelling already done

4 November 2015
It seems that the change in government has led to a change in willingness to consider GST reform. But CPA Australia Chief Executive Alex Malley says the modelling is already done – it’s time for action.

The current Federal Treasurer, Scott Morrison, hasn’t ruled out taking an increase to the GST to the next federal budget. While this is a far cry from supporting a GST increase, it does leave the door open to reform.

“What we want, Tom, is a tax system that backs people who are out there working and saving and investing,” said Morrison on 3AW radio in early November.

“Now, at the moment if you are on an average wage, next year you will be on the second highest tax rate.

“We are looking at all sorts of options at the request of the states and territories and we are working with them but this is the point, it is not about revenue, what it is about is ensuring the tax system is not penalising people who are actually out there having a go.”

And in an interview on ABC radio, the Treasurer made the following comments:


Can you confirm the Government is modelling scenarios around a 15 per cent GST?


The Government wants a better tax system, we have made no secret of that. There’s been work been done with the states and territories at their request now for some period of time. At the last meeting of state Treasurers we responded to a range of questions that they put around these issues and at our next meeting of state Treasurers we will be looking at a whole range of issues around state taxes. I have described it as being in a discovery phase and we are all working collaboratively together because we want to see a tax system that grows our economy and supports jobs.

In terms of GST reform, it would seem more of a “yes” than a “no”.

About reform, not revenue

CPA Australia Chief Executive Alex Malley wants action sooner rather than later.

“Against a backdrop of declining growth in tax receipts and increasing expenditure, rising unemployment and a challenging global economy, now is the time to put an end to policy paralysis and focus on policy reforms in the national interest.

“Thus far, the reality of partisan politics appears to be too high a hurdle when it comes to modernising our tax system. We know that comprehensive tax reform can be difficult, but we also know it has the potential to be transformative.

“While there is no perfect model, the process must be underpinned by a commitment to building the case and ensuring the community has an understanding of the key reasons for reform. Only a consistent narrative that establishes that ‘no change’ is not an option will provide the necessary momentum.

The challenge for Prime Minister Turnbull is to revive this process, GST debate and all.”

Malley says a CPA Australia report released earlier in the year clearly shows that reforming the GST can deliver tax cuts, improve household incomes and boost Australia’s economic growth.

“Our research looked in detail at four options, just as Treasury is now doing, and paints a comprehensive picture of how changes to the GST will impact households and the broader economy”, Malley says.

“We’ve modelled different scenarios of changes to the rate and base of the GST at 10 and 15 per cent, with each generating additional GST revenue ranging from $12.1 billion to $42.9 billion in the first year of introduction.

“The GST story is broader than revenue – our report shows that the extra revenue can be used to abolish a number of inefficient state taxes and also provide for personal income tax cuts and compensation for low income households, while also boosting economic growth.

“The net outcome in all four reform scenarios is that households across the income spectrum can be better off.

“Our economy relies far too much on incomes taxes – personal and corporate – and a greater reliance on taxes on consumption deliver a better, more resilient tax mix.”

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