17 April 2024
1300 794 893

CBA boss wants a higher GST but no politician supports his call

Peter Switzer
27 March 2024

I hate to sound like an obstructionist unwilling to change but after decades of decoding economic stories from governments, Reserve Bank boards, Premiers, CEOs and the bodies such as the World Bank and the OECD, I’ve heard it all before. And the one that gets the most excitement happening is when someone boldly calls for an increase in the GST to pay for big reductions in our income tax.

We’ll hear about how the OECD says our income tax rate is too high compared to similar countries, because our GST is too low. But this isn’t a subject or reform that’s easily sold to a voting public.

The real problem is that we don’t have politicians smart enough, gutsy enough and loved enough to get us to budge on raising the GST.

The difficulty of selling a higher GST by dangling lower income tax was seen when Malcolm Turnbull first unseated Tony Abbott from the PM job. This was when Malcolm was really popular and before he got the nod from his party to cancel Tony’s ticket, he was talking a big game on tax reform.

However, not long after he took the reins of government, he quickly had some buckin’ bronco buddy MPs who were never going to buy a higher GST. Given the popularity of the Coalition when Malcolm took over, it made sense not to talk about raising the GST.

While no politician is talking tough on GST, it’s easier for the boss of the CBA Matt Comyn to tell the AFR’s banking summit what a better tax system to give us great economic growth would look like.

Our long-term growth forecast is currently 2.2% — down from 3.1% — and Treasurer Jim Chalmers’ report on us and our growth reads as “must do better.”

This is what Comyn called for:

  1. No tax up to $20,000, then a 20% rate from $20,001 to $80,000, then 30% tax $80,001 to $300,000 and 45% for over $300,000.
  2. Scrap personal deductions except for charity donations!
  3. The GST goes from 10% to 15% and a lot more goods and services will be GST’d!
  4. New tax on tech giants from OS to raise $5 billion.
  5. Crash the cash economy by stopping cash only payments at $500.
  6. Look for savings from the NDIS and other government services.
  7. Kill state payroll taxes and stamp duty on property and insurance, which will cost $55 billion.
  8. Comyn even wants the three-year term for the federal government to be raised to four years.

 

It looks good for an economist and banker but losing tax deductions and paying 15% GST wouldn’t be easy to sell to voters. Even the Government might be a bit squeamish about the $35 billion loss of annual revenue because of the tax cuts.

The reality is we don’t have one politician who could convince Australians to buy into Matt Comyn’s economically rational view of what should happen in this country. Until this happens, we’ll be stuck with our inadequate tax system that won’t be a big help for economic growth.

It sounds kind of weird, and far too negative for someone like me, but we need our politicians to get better at being politicians and leaders before we can dream of a better tax system that will help grow a better economy.

Comments
Get the latest financial, business, and political expert commentary delivered to your inbox.

When you sign up, we will never give away or sell or barter or trade your email address.

And you can unsubscribe at any time!
Subscribe
1300 794 893
© 2006-2021 Switzer. All Rights Reserved. Australian Financial Services Licence Number 286531. 
shopping-cartphoneenvelopedollargraduation-cap linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram