Australia's Turnbull Yet to Be Convinced of GST Increase Benefit

  • Goods and services tax raise has to boost growth, jobs: PM
  • Turnbull says everything on the table in terms of tax reform

Australian Prime Minister Malcolm Turnbull said he’s yet to be convinced of the benefits of increasing the goods and services tax unless it boosts economic growth and employment.

The government, which is expected to hold an election in the second half of the year, is looking at an overhaul of the taxation system, including a potential increase in the GST to 15 percent from 10 percent.

“Whatever policies we take as part of our tax reform package will be ones that we are satisfied will deliver the growth and jobs outcome that we want,” the Liberal Party leader told the ABC “Insiders” program on Sunday.

An increase in the GST by itself would be negative because the question remains what you do with the proceeds, Turnbull said. He said he wants taxes as a percentage of Australia’s gross domestic product to come down.

Turnbull referred to the argument that says the extra A$30 billion ($21.2 billion) in revenue generated by a higher GST could be used to reduce personal income taxes once people on low incomes and on welfare have been compensated.

“It’s not a question of politics here,” he said. “At this stage I remain to be convinced, to be persuaded, that a tax mix switch of that kind would actually give us the economic benefit that you’d want in order to do such a big thing.”

Thorough Examination

A survey by Newspoll published in the Australian newspaper on Feb. 1 showed that 54 percent of Australians oppose the GST being raised to 15 percent as part of a reform package that may also include income tax cuts. The opposition Labor Party has said it will fight any changes to the tax, saying an increase would hurt lower-income Australians.

The former banker said that the issue of a GST income tax swap proposal was complex, especially when it came to compensation.

With the government running a deficit, “we’ve got to find money for tax cuts from savings and expenditure,” Turnbull said, adding that other areas being looked at were corporate tax concessions and superannuation.

“We are looking at all of these areas,” he said. “This is a very thorough, evidence-based examination.”

Turnbull, who ousted his predecessor Tony Abbott as prime minister in September and has steered the government to an election-winning lead in opinion polls, reiterated Sunday that an election will be held in August, September or October.

The government is due to present its budget in May.

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