Mature Debate on GST should include Health and Education Exemptions

Research by The Australia Institute, including modelling commissioned from NATSEM has shown that ending the GST exemptions for private education and health, both of which overwhelmingly benefits higher income earners could net the Government up to $2.3 billion per year.

There are a number of ways for the Government to increase revenue, such as winding back the superannuation tax concessions, but government backbenchers are increasing talking up the prospect of broadening the GST by ending the exemption for fresh food.

“It’s clear that the last budget failed the fairness test for most Australians,” Executive Director of the Australia Institute Dr Richard Dennis said.

“While there are many area of tax reform that we should be tackling first, it looks like the Government in increasingly focussed on the GST.

“The exemption of food from the GST, which John Howard laments conceding, is once again being targeted, and it raises real concerns for lower income families.

“Barnaby Joyce, who was so concerned about the negligible effect of a carbon tax on his touted ‘$100 leg of lamb’, is now wanting to slap a 10 per cent tax on lamb, and the baked potatoes along with it.

“Government revenue has fallen as a result of the big tax cuts introduced at the beginning of the mining boom. If the Government feels that the only choice is to increase GST, then exemptions for private health insurance and private education, which amount to $2.3 billion per annum should be abolished before anyone starts talking about introducing a tax on fresh food.

“It’s remarkable that a government that is determined not to tax pollution would even entertain taxing fresh food,” Dr Denniss said.

The Australia Institute research showed the GST burden as a percent of after tax income is far higher for the lowest income households than those in the top twenty percent. 

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