Australian budget

GST reform good, but there’s more pressing issues

Leith van Onselen
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By Leith van Onselen

The Parliamentary Budget Office (PBO) has provided new modelling outlining five reform options that it argues could enable the GST to be increased/broadened without adversely affecting the bottom 40% of income earners.

The five reform scenarios are:

  1. include basic food in the GST base;
  2. include basic food, health and medical care, education, child care and water and sewerage in the GST base;
  3. increase the GST rate from 10% to 15%;
  4. GST rate of 15% and include basic food in the GST base; and
  5. GST rate of 15% and include basic food, health and medical care, education, child care and water and sewerage in the GST base.
Each scenario includes a compensation package that, in aggregate, would be sufficient to fully offset the impact of the changes on the bottom 40% of households by
disposable income.
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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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