Uniting Communities supports NSW Premier Baird’s call for active consideration of increased tax revenue raising, but strongly opposes an increase on the current rate of GST.

“GST is an unfair tax in that lower income people pay proportionately more of their income for GST than higher income earners, so increasing the rate of GST from the current 10% is not on,” said Mark Henley, Manager of Advocacy and Communication for Uniting Communities. “The 15% GST rate on existing goods and services attracting GST, as proposed, would be a massive ‘hit’ for lower and modest income households who are already struggling the make ends meet with rising health, utilities, education and other costs.

While there is an argument that low and modest income people can be compensated with the introduction of a higher GST, the evidence is that such compensation approaches, either through concessions or Social Security payments lose value over time and so do not keep up with rising costs, they have also proved to be politically difficult to maintain over time. “So the compensation argument does not stack up against many years of experience,” added Mr Henley.

Uniting Communities recognizes the need to increase tax revenues, but there are much fairer ways to achieve this, including:

• Reinstate the personal income tax rates that existed before the tax rate cuts that were introduced by Howard and Rudd governments

• Cap superannuation tax concessions for higher income earners

• Reduce the extent of negative gearing, for example in purchasing an established dwelling

• Apply taxation to on-line purchases, including gambling and financial services

“The Premiers and Prime Minister need to consider tax revenue options that are fair, and not focus on increasing GST, a highly regressive tax,” said Mr Henley.