Australian Gst And The Australian Economy Essay

1049 Words Oct 17th, 2016 5 Pages
Australian GST was introduced in year 2000 at 10% flat rate with a number of GST -free supplies, i.e. food, health services, education, etc. With the end of mining boom, the Australian economy is slowing down and more importantly the structural and demographic changes of the economy will have a long term impact to the financial health of Australia. Moreover, the aging population also add more burden to the government budget and this lead to the discussion of tax reform in recent years and in particular the GST reform. The discussion of increasing the GST rate or broadening the GST base is politically very sensitive topic since its affect every single Australian and how the GST revenue is distributed to the states also make this topic very complicated to tackle by the commonwealth government. I believe that we should not agree to GST increase or broadening the GST base to increase the tax revenue just to fill the hole of the government budget deficit but need to look at the entire tax system to see how to increase economic efficiency and job expansion.

Australian GST is modelled on the European VAT system and Australian GST rate is among the lowest in the OECD countries. This doesn’t mean that we have opportunity to increase GST but a clear warning to how easy it is for GST to keep on rising. When UK introduced the VAT it was 10% and now it is 20% and most European countries have VAT rate of around 20%. GST increase is relatively easy for government to implement since…

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