Originally published in The Australian Financial Review on May 20, 2014

If Paul Keating’s pet shop galahs are still alive I suspect they are talking about tax reform these days.

And no doubt all right-thinking galahs know that tax reform and increasing the GST is one and the same thing.

The Commonwealth government will collect $363 billion in taxes this year, with state and local governments collecting a further $83 billion in taxation. The GST accounts for around $51 billion, or 11 per cent, of total revenue. Increasing the GST to 12 per cent would collect an additional $10 billion or so. In an economy with a nominal GDP of $1521 billion and a population of more than 22 million it is, quite simply, small change.

If raising the GST is “the solution” then ‘the problem can’t be very big, which, of course, is exactly what the World Bank, the IMF, the OECD and the rest of the world have been trying to tell us. Australia is a low tax, low-debt country. The fact that our low level of debt is currently growing faster than the European average is cause for about as much concern as news that an infant has doubled its weight in six months. Small things often grow fast.

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