A QUT economist has backed calls to raise the GST rate to 15 per cent but warned a new tax structure must be fair to Australia's lowest earners.
Accounting body CPA Australia today released a report suggesting a 15 per cent GST on everything would raise $42.9 billion in the first year and leave all Australian workers better off.
Dr David Willis, from QUT Business School, said raising the GST was a sensible move to increase revenue.
"Today's report by the CPA arguing for an increase and widening of the GST has a lot of merit," Dr Willis said.
"It is something that is needed sooner rather than later and it needs to be done in a bipartisan way from Canberra.
"It is a way of increasing the revenue from the economy which would benefit state as well as Federal Government finances."
However Dr Willis said the report suggested applying tax relief to items that "will benefit the rich more than the poor".
"The lowest income earners in Australia already pay the most GST as a proportion of their income so they deserve some respite from any proposed changes.
"When we do inevitably increase the GST, the Federal Government needs to also increase the tax threshold at the lowest end. Firstly, to compensate for the GST rise, and secondly, to provide an incentive to work as more can be earned before income tax is paid."
Dr Willis suggested increasing the amount one can earn before paying income tax from $18,200 to $22,500 and changing the lowest tax banding to $22,501 to $39,000.
"This change would be less regressive than what the CPA is suggesting," he said.
Media contact:
Rob Kidd, QUT Media, 07 3138 1841, rj.kidd@qut.edu.au
After hours, Rose Trapnell, 0407 585 901
