Hike GST, reduce income tax to boost productivity

AMP’s Shane Oliver urges GST hike, income tax cuts to enhance productivity, following Jim Chalmers’ economic reform address.

Treasurer Jim Chalmers has been advised to increase the Goods and Services Tax (GST) and reduce income tax to enhance productivity in Australia’s economy, as Labor prepares for a second term.

During his address at the National Press Club, Chalmers reiterated the government’s commitment to productivity improvements and meaningful tax reform. Although he did not discuss GST in-depth, he acknowledged the relevance of the topic ahead of the upcoming productivity roundtable.

AMP’s chief economist Shane Oliver suggested that a higher GST, applied uniformly, could reduce income tax rates. He argued for a potential increase of the GST to 20% to fund lower income tax thresholds and rates.

Tax reform

Chris Freeland from CPA Australia supported tax reform, stressing that the current system relies too heavily on personal and corporate income taxes and called for a transparent discussion on necessary reforms.

Chalmers also addressed Labor’s proposed superannuation tax increase and the taxation of unrealised gains, which have drawn criticism from various business leaders. They claim that such measures could discourage productivity and investment, especially among younger Australians.

Tax reform is considered essential to improve Australia’s economic competitiveness and mitigate the reliance on income-based taxes.