GST increase would hit households already under pressure

The St Vincent de Paul Society is urging the Federal Government to reject calls for an increase to the Goods and Services Tax, warning it would place an unfair burden on people already struggling through Australia’s escalating cost-of-living crisis.

The Grattan Institute’s new Budget reboot: How to fund Australia’s future report argues for a higher and broader GST as part of wider tax reform.

However, St Vincent de Paul Society National President Mark Gaetani said increasing the GST would be a regressive measure because it would take a greater share of income from low-income households than from those on higher incomes.

“An increase to the GST is the last thing everyday households can afford. It would push up the cost of essentials at exactly the moment people experiencing hardship are telling the St Vincent de Paul Society they have reached their limit,” Mr Gaetani said.

Recent analysis by Associate Professor Ben Phillips from the Australian National University, has found that increases to the GST would have a regressive impact, particularly when assessed against disposable income, and disproportionately affect lower-income households.

The GST accounts for 5.4% of disposable income for low-income households, compared with 2.6% for high-income households. Raising the GST to 15% would increase this to 8% for low-income households and 4% for high-income households. Broadening the base would result in similar outcomes. CPI indexation of welfare payments would reduce some of the impact for lower-income groups but would not fully offset losses. Middle-income households, which are less likely to receive compensation, could experience relatively greater financial strain.

“Tax reform should make Australia fairer, not deepen the financial hardship facing people with the least capacity to absorb further price rises,” Mr Gaetani said.

“Any proposal that raises the cost of everyday goods and services must be judged by its impact on people living on low and fixed incomes, including pensioners, jobseekers, single parents and lower-income workers.

“Charities like the Society sees the consequences of inadequate incomes every day. Demand for food relief, help with utility bills and emergency assistance increases every month, while housing costs continue to leave too many people with little or nothing after rent.

“A fairer approach would ensure those with the greatest capacity to contribute do so, rather than relying on a consumption tax that falls hardest on households already doing it tough.”

Mr Gaetani said Australia needs a responsible, sustainable conversation about revenue and public services, but it must begin with fairness and protect people experiencing poverty and disadvantage.

“Reform cannot come at the expense of those people least able to pay. At a time when households are under extraordinary pressure, increasing the GST would move Australia in the wrong direction.”

The St Vincent de Paul Society in Australia consists of more than 40,000 members and volunteers who operate on the ground through over 1,000 groups located in local communities across the country.

MEDIA CONTACT
0475 068 209 or media@svdp.org.au