Looking back, the introduction of the GST 20 years ago shows that major taxation change requires a burning platform, a focus on fairness, and outstanding political leadership.
Australia’s GST came into operation 25 years after it was recommended by the Asprey review published in 1975. The story contains several valuable lessons for those thinking about tax reform today.
Kenneth Asprey drew attention to Australia’s relatively heavy reliance on company and personal income taxes. And he noted that personal income tax collections were increasing faster than GDP. The review concluded that marginal tax rates should be cut by broadening the income tax base, including more effective taxation of fringe benefits and capital gains, and accessing a broad consumption tax base. At the core of the recommendations was the notion of a "tax-mix switch" from income to consumption.
