Goods and Services Tax (GST)

GST is budgeted to raise $67.5 billion in 2018-19, and $289 billion over the forward estimates. It is our third largest tax.

GST represents 14.3% of all Commonwealth revenue, and 3.5% of GDP. The GST is committed to funding State and Territory governments, and general revenue assistance from the Commonwealth (which is mostly GST) represented about 46% of all State and Territory spending in 2016-17.

GST is currently levied at the rate of 10% for all goods and services with the exceptions of fresh food, health care, residential aged care, child care, financial services, education, and water and sewerage.

Lifting the rate of the GST, or extending its coverage to include items not presently subject to GST (or both) are the most commonly proposed reforms to Commonwealth taxation. Either path could make a major contribution to Commonwealth (and, by legislation, the States and Territories) revenues, though consideration needs to be given to how much of the additional revenue would be used to provide compensation to affected groups.

You can choose:

• a single rate for the GST, which will apply to the existing base and to any areas that you choose to include in the coverage of the GST
• to eliminate the GST - set the rate to “0%”
• to extend coverage of the GST to
  • fresh food
  • education
  • health
  • financial supplies
  • child care
  • aged care
  • water and sewerage
• how much of the GST that is raised will be used to provide compensation to affected groups, and you can set different levels of compensation for each class of GST items. The balance (i.e. all additional receipts less compensation) will flow to the budget bottom line

The model does not take account of the impacts of changes to other taxes and expenditures on GST receipts.

The model makes no assumptions about whether and how the legislative framework governing the GST could be changed. Nothing about the GST gets changed without the agreement of the Senate and all of the States.

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