Would you pay more? Push to raise GST to 15 per cent

IT could be the only way to prevent Australia from “tumbling off a fiscal cliff”, but would you be happy to pay more for everyday goods and services?

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The Abbott government is under pressure to consider raising the GST to 15 per cent to fix Australia’s looming budget crisis.

NSW Premier Mike Baird will use his role as host of a state and federal leaders retreat this week to push the issue of GST reform, which would stop the nation from “tumbling off a fiscal cliff,” The Australian reports.

It comes as new modelling from the Chartered Accountants Australia And New Zealand (CAANZ) reveals increasing the GST to 15 per cent and removing all exemptions would raise $256 billion over four years.

CAANZ suggests the government could secure the GST increase in exchange for $171 billion in permanent tax cuts and increases to welfare and the aged pension as a means of compensation, Fairfax reports.

Mr Baird has also suggested those on incomes under $100,000 would need compensating.

But federal Treasurer Joe Hockey and some of Mr Baird’s state counterparts may take some persuading.

Mr Hockey declared tax reform “game over” after Victorian Labor Premier Daniel Andrews voiced opposition to a GST increase late last week. South Australian Premier Jay Weatherill is also against it, while West Australian Premier Colin Barnett has said he will only support a GST increase if his state gets a larger slice of it.

Any decision to up the GST would have to be unanimous.

“The GST has not been touched since it was implemented 15 years ago. It is a highly efficient tax that is difficult to avoid,” The Australian quotes Mr Baird as saying.

“While it is a regressive tax, we can take measures, through the income tax and welfare system, to ensure that any changes do not make life harder for struggling families and the vulnerable. Quite the opposite — they would pay no additional tax, but receive the benefits of improved healthcare.

“The fiscal reality is that all the resources of the commonwealth and the states, pooled together, can no longer fund health services to our current standard.”

State and territory leaders will meet with Prime Minister Tony Abbott in Sydney on Wednesday ahead of a Council of Australian Governments forum on Thursday.

Originally published as Would you pay more? Push to raise GST to 15 per cent