Australia’s goods and services tax is the one tax that the rich in this country love.
The GST, being a tax on general consumption, disproportionately falls on the working class—it’s paid every time we go to the shops to buy basic household items (or anything else), jacking up the price of goods and services by 10 percent.
This makes the GST a regressive tax: one that is paid at the same rate by everyone, regardless of income. That extra 10 percent paid at the supermarket is a lot more noticeable if you’re earning $1,000 a week rather than $5,000. Relative to incomes, the GST is a greater burden on the poorest.
Every few years, some combination of conservative politicians, consultancy firms or right-wing think tanks proposes an increase to the GST for this reason.
The “teal independents” are the latest to jump on board. The Financial Review reports that Victoria MP Zoe Daniels said in August: “There is a solid argument to increase tax on consumption as long as lower-income households are adequately compensated, as John Howard did when he introduced the GST”.
Former Liberal Prime Minister John Howard made the GST part of his anti-working-class agenda during the 1998 federal election campaign. As Daniels referenced, Howard was able to push the GST through on the promise of income tax cuts for workers. Thanks to inflation, these tax cuts proved temporary, but we’re stuck paying the GST.
And the only people getting a tax cut right now are the rich, thanks to the regressive Stage 3 tax cuts.
But surely, the people in favour of the GST aren’t doing it solely out of hatred for the poor and a desire not to pay taxes themselves?
According to their paid mouthpieces, like the consulting firm PwC, the rationale is that the GST does “not impact economic growth to the same extent as other taxes such as corporate or personal income taxes”.
Writing in 2020, PwC explained for us plebs that switching from progressive taxes—those that result in a general transfer of wealth from the rich to the poor—to higher consumption taxes could increase the size of the economy by up to 1 percent “in the long term”.
Of course, there’s no discussion of the effect an increase in taxes on workers and pensioners would have on poverty rates, wealth inequality or living standards.
The GST should be abolished, and tax rates on companies and the wealthy should be increased to make up the difference.