Turnbull Backs Away From Raising Goods and Services Tax

  • GST increase has to boost Australian growth, jobs, PM says
  • 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, indicating he’s backing away from the policy as part of a wider taxation system overhaul.

Malcolm Turnbull.
Malcolm Turnbull
Photographer: Krisztian Bocsi/Bloomberg

The government, which is expected to hold an election in the second half of the year, has been looking at a potential increase in the GST to 15 percent from 10 percent to reduce a reliance on personal income tax.

“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,” Turnbull told the ABC “Insiders” program on Sunday. “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.”

Turnbull took the helm in September after ousting Tony Abbott in a ballot of Liberal Party lawmakers, declaring that the nation lacked economic leadership. He’s yet to articulate his vision, with uncertainty around the tax reform package now being criticized by the nation’s business leaders.

Labor Opposition

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 government has abandoned raising the GST and is considering cutting tax concessions in the superannuation system, the ABC reported Monday, citing unidentified ministers.

“With something as difficult as this, the Red Sea is not going to part every time for you,” Treasurer Scott Morrison said in a radio interview on Monday. The government is approaching the conclusion of its tax review process, with the final decision on whether the GST should be increased to be made by Cabinet, Morrison said.

With the government running a budget 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.”

The government is due to present its budget in May.

Before it's here, it's on the Bloomberg Terminal.