Australia GST Reform

Posted: March 18, 2024


            GST refers to the Goods and Services Tax that is among the many taxes such as the Income Tax, Capital Gains Tax, and Fringe Benefits in Australia. According to the Henry in his guide to the Institutional Framework in Australia, he describes the Australian Taxation System as the most involved in the world comprising of approximately 125 taxes. Henry mentioned that many different organizations play different roles within the system to ensure its integrity and that all Australian citizens are equally treated by guaranteeing equity in the taxation system. The system is embedded in the way of life for all Australian taxpayers. They pay tax on their income, on the purchase of goods and services they use, upon selling assets and other valuables. The taxes help the government to provide social amenities and other services to the citizens such as hospitals, schools, defense, and financial assistance. The government relies heavily on the revenue from taxation to be able to run and finance activities and services that it offers to the public. The government, therefore, focuses on carrying out reforms on the system to adjust with the changing economies. The GST is an area that is constantly under changes and review because of the current GST base to make basic foods taxable. Many people, especially in the government, feel that the reform will solve some of the state's financial woes while others are against any rise or broadening of the tax base. This is a political issue and is extremely topical as government, opposition, and the premiers of the Australian States and territories are engaged in heated debates regarding the issue of GST and its possible reform. It is evident to claim that the GST should not be raised because it will increase the financial burden on the consumers and cause improper allocation of government facilities and other benefits to the citizens especially in the developing territories of Australia state leading to the unfair distribution of the revenue.

            The unfair distribution of the revenue from the higher authorities such as Commonwealth Grants Commission that distributes GST has led to increased record deficits and state debts. The state has to respond by developing reforms that help raise revenue to recover the debt. This will raise the prices of essential commodities and the consumers to suffer the burden. Mr. Barnnet wanted the revenue shared among the larger states according to the population to remove the debt without increasing the load to the final consumers. However, his campaign failed and he told the government that they would not get the results they wanted.  The result they wanted to accomplish was per capita distribution with some retained to the weaker states. Mr Barnnet supported the Prime Minister Turnbull plan for handling income tax powers to the states before the COAG meeting rejected it. Many countries have taken the opportunity of increasing GST; therefore, they made sure they do not debate on the issue of having an equal distribution of revenue. This will affect the consumers and the developing states economically because they will suffer the impact.

            Moreover, the West Australian government has been pushing for an overhaul of the GST to secure a greater share of revenue. The Prime Minister Malcolm Turnbull has sidelined any efforts to increase the rate of the GST because he is convinced that there will be no economic boost realized upon the increase rather the consumers and citizens will suffer the burden of the increased taxation rates. The distribution of GST revenue on a per capita basis does not depend on the hiking the GST taxes; therefore, Dr Nahan rejected any federal push for the states to solve their revenue problems by lifting taxes. The government should struggle to deal with the budget to avoid burdening the citizens and ensure that there is equity in the distribution of resources and other benefits.

 Besides, a consumer confidence report released during March' 2016 revealed that 80 percent of the West Australians do not believe in the government to have a realistic plan to restore the taxation rating. The government has a role in restoring the consumer confidence by setting out a strong plan concerning the taxation and solving the financial deficits. They should engage in a broad range of industries, consider intensifying exports, and put a lot of interest in innovation, agriculture, and science. Tourism and international education are among the industries that provide an opportunity for growth of the state economically. Therefore, the federal should focus on implementing these strategies of creating revenues instead of having the consumers SGT taxes increased. This will help in boosting the consumer confidence to the government. The government should also pursue a broader taxation reform with the Commonwealth to ensure that West Australia receives a fair share to prevent straining its citizens.

 Furthermore, an increase in the GST without an increase in the accompaniments will be not good for the consumers and the developing states in Australia. The reality is that any increase in GST without an increase in pensions would be worse because it will be compensated by decreasing the cost of living. The Member of Parliaments should stop worrying about the politics of tax hike. They should not be focused on GST because it is not the solution to economic management. There is a plenty of other tax reforms that needs to be addressed before thinking of increasing GST that directly affects the consumers and the poor federals. A budget repair is required to address adequately the issue of falling economic times that the government and the politicians think that it can be cured by increasing the GST.

 The GST should not be hiked mainly at the expense of the consumers and the small business units. This is because the burden is passed to the citizens in the form of increased pricing of goods and services. Their payrolls are not growing; thus, they are made to struggle to live under harsh economic times. Focusing on increasing other types of taxes such as land taxes would be more efficient and would not affect the consumers and the developing federals. The wealthy landowners will have to pay high taxes for their mortgages and premises unlike imposing high taxation in the essential commodities such as food that is needed by the poor consumers. Also, relieving the tax burden on the primary goods will ensure that no politics are involved in SGT reforms thus there will be equity in the resource allocation.


            It is true to argue that SGT rate should not be raised or the base broadens because it will burden the consumers and will lead to inequality in the distribution of the government’s benefits and social services especially in the developing federals. The Australian politicians such as Turnbull do not support the idea of increasing the SGT because they disadvantage they would cause to the citizens and the developing countries. The GST reforms should not be done out of political influences and desire to gain popularity because the parties will tend to be biased and self-centered. This will have negative impacts to the citizens and the developing states.