Page 8 - FWP Wealth Adviser newsletter - July 2025: Issue 116

ISSUE 116
JULY 2025

depositphotos.com

FACING A POSSIBLE GST INCREASE

INEVITABLE, ILL-TIMED, AND COSTLY

FOR AUSTRALIANS

BY WEALTH ADVISER The GST, introduced in 2000 as a broad-based con-
sumption tax, was always intended to be a stable source of
Introduction: The GST Debate Returns revenue for governments. Over time, however, its relative
Tax reform is once again dominating headlines in contribution to the overall tax mix has shrunk, while spend-
Australia, with the prospect of raising the Goods and ing pressures—particularly in health, aged care, and social
Services Tax (GST) from 10% to 15% now a topic of serious security—have grown. The result is a widening gap between
political discussion. For many, this is hardly surprising. The what governments collect and what they must spend to
seeds for such a move were sown years ago, as governments maintain services and support an ageing population.
grappled with an ageing population, mounting budget This article explores why a GST increase now seems
deficits, and the need for a more sustainable revenue base. inevitable, why its timing could not be worse for ordinary
As Firstlinks observes, “Tax reform is once again a central Australians, and what the consequences might be for the
topic in Australia, with proposals to raise the Goods and broader economy. In doing so, it draws on recent commen-
Services Tax (GST) from its current 10% to 15% gaining tary and analysis from leading Australian financial, academ-
renewed attention.” This renewed focus is not occurring ic, and policy sources.
in a vacuum: Australia’s economic landscape is shifting,
shaped by demographic trends, persistent budget pressures, Why a GST Hike Now?
and the need for a more productive, fairer tax system. As Political and Economic Drivers
the Treasurer and policymakers debate the future of GST, The push to raise the GST is not occurring in a vacu-
Australian households are left to wonder: what would a um. Australia’s fiscal landscape has become increasingly
higher GST mean for their day-to-day lives, and why is this strained, with rising health and social security costs driven
debate returning now? by demographic change. As The Conversation notes, “GST

8