Australia headed for GST rise?

Sat 22nd Mar 2014

There is an on-going debate in Australian political circles about the need to raise Australian GST from the current 10% rate. New Zealand GST is already at 15%; China VAT at 17%; and the average EU VAT rate is over 21%.

Australian politicians accuse each other on GST rise

In the last Rudd government, a full tax review by former finance minister Henry concluded that a GST rise was required. This would help broaden and stabilise the tax base, and help fund reductions in labour costs and corporate taxes to keep Australia competitive. This is particularly important as the key commodities prices are falling with fears of US tapering, and as the budget deficit opens up following the heavy tax cuts during the financial crisis.

The current government may look to raise GST if upcoming state elections go its way. However, the Labor opposition claims that the tax burden to GDP ratios of 23% are about right and there is no call for further consumption tax rises.