CANBERRA: Australians could be slugged up to 50 percent more in their goods and services tax (GST) as well as charged tax on fresh food and non-alcoholic beverages under radical proposed changes by the federal government.
Documents leaked on Wednesday, in the lead up to a meeting between state leaders and Prime Minister Malcolm Turnbull, revealed the government could raise up to 32.5 billion U.S dollars annually under the tax increase, but it would come at a much greater cost to the taxpayer.
Currently, Australians pay a GST of 10 percent. However, it excludes fresh fruit and non-alcoholic beverages. The proposed reform would raise the GST to 15 percent and include fresh food, all drinks and sewerage.
Federal Treasurer Scott Morrison said there were five other proposals in the leaked document obtained by Fairfax, as well as no concrete details of possible compensation for lower to middle income earners.
The document said offsetting the GST increases for households earning less than 73,000 U.S dollars per year as well as offsetting half of the increased tax for those earning less than 112,000 U.S dollars annually would use “at least half” of the extra GST revenue.
Morrison said no decision had yet been made, instead the six proposals would be put to the state and territory leaders for further discussion.
“There’s no secret about (these proposals). It’s been hiding in plain sight,” he told reporters on Wednesday.
“News flash, the Commonwealth is having a discussion with the states and territories about how we make our tax system better. That’s what’s happening.”
Other measures proposed in the documents include:
–Increasing the GST rate to 15 percent while maintaining the current GST base (raising 23.5 billion USD annually)
–Increasing the GST rate to 12.5 percent and expanding the GST base to include all food and non-alcoholic beverages (18.1 billion annually)
–Increasing the rate of the Medicare Levy from 2 percent to 4 percent in one step. (11 billion annually).
However, the opposition has come out and slammed the proposals. Shadow Treasurer Chris Bowen said the Turnbull government was “dudding” lower income earners by expanding the GST to staples such as fresh food and water.
“The leaked documents demonstrate that the Liberal Party would go to any length to dud low and middle income households,” Bowen said in a statement on Wednesday.
Prime Minister Turnbull is set to discuss the propsed plans with state and territory leaders at the Council of Australian Governments (COAG) meeting in Sydney on Friday.
