Economists call selected government to boost productivity via pivot to raised and widened Goods & Services Tax
Leading economists and policy experts are urging the Australian government to consider raising and broadening the Goods and Services Tax (GST) while cutting income tax, as part of a broader economic reform agenda aimed at boosting productivity and addressing Australia’s mounting national debt, which nears $1 trillion.
Australian GST is 10%. New Zealand is at 15% while the average EU rate is almost 22%.
US Treasurer opens up GST reform debate
The conversation has been reignited following Treasurer Jim Chalmers’ speech at the National Press Club last week, where he vowed to deliver meaningful tax reform and improve the budget. Although the Treasurer did not specifically mention the GST, he faced direct questions on the issue and declined to rule out changes, while stating he was personally against lifting the rate.
However, economic commentators argue that Australia’s tax system is outdated and over-reliant on income and corporate taxes, which risk stifling growth and productivity. GST—stuck at 10% since its introduction 23 years ago—could be both broadened and increased, calling it an “efficient” indirect tax on consumption that doesn’t distort savings or investment decisions.
Shifting the tax burden from income to consumption would free up capital for business investment and economic growth, ultimately increasing GDP and the government’s tax revenue without directly raising income taxes.
Australia may need less reliance on income tax and more on GST. It could follow Europe’s lead, funding major income tax cuts, including lifting tax thresholds by $10,000–$20,000 and reducing the top tax rate to 30–35%.
