GST change must be compensated: PBO

Parliamentary Budget Office notes disproportionate payments among low-income households.

GST change must be compensated: PBO

The Parliamentary Budget Office says if the GST was raised to 15 per cent and expanded to take in all items that are currently exempt it would raise $65.8 billion a year.

However, in a new analysis it notes the regressive nature of the 10 per cent consumption tax, where on average households on the lowest income pay more than 12 per cent of their disposable income on GST.

This is about three times the proportion paid by those on the highest wages.

The independent agency sets out five options for changes to the GST, estimating what compensation would be required in each case.

In the case of raising the GST to 15 per cent and removing all exemptions, including food, health and education, $16.5 billion in compensation would be required, resulting in $49.3 billion in net additional revenue.

The report makes no assumptions how the additional revenue should be spent.