GST increase would hit households already under pressure

The St Vincent de Paul Society is urging the Federal Government to reject proposals to increase the Goods and Services Tax, warning the move would disproportionately affect low-income households. National President Mark Gaetani stated that raising the tax would increase the cost of essential goods for people already struggling with the cost-of-living crisis.

The call for tax reform comes from the Grattan Institute’s report, Budget reboot: How to fund Australia’s future, which argues for a higher and broader GST. However, Gaetani described an increase as a regressive measure that takes a larger share of income from those with less money than from high-income earners.

Research by Associate Professor Ben Phillips from the Australian National University supports this concern. His analysis shows that the GST currently accounts for 5.4 percent of disposable income for low-income households, compared to 2.6 percent for high-income households. If the GST were raised to 15 percent, the tax would consume 8 percent of disposable income for low-income households and 4 percent for high-income households. While indexation of welfare payments could lessen the impact, Phillips noted it would not fully offset these losses.