INTHEBLACK November 2025 - Magazine - Page 28
F E AT U R E
“Changes to the GST rate and base require all states and
territories to agree unanimously. As a matter of constitutional
power, the federal parliament could change that legislation.
But as a matter of federal practice, a conversation around
the GST should be a conversation with the states.”
DR ARUNA SATHANAPALLY, GRATTAN INSTITUTE
to be breaking the nexus between revenue
from the GST and payments by the federal
government to the states and territories.”
There is a view that GST reform would
be most powerful if it enabled other tax
reforms at the state level.
“The GST is the only guaranteed and
untied revenue the states and territories
receive. Their other major sources of revenue
are generally the worst taxes from an
economic perspective,” says Grattan Institute
CEO, Dr Aruna Sathanapally. These include
stamp duties and payroll tax.
“The GST legislation and intra-government
agreements passed in 1999 say changes to
the GST rate and base require all states and
territories to agree unanimously. As a matter
of constitutional power, the federal parliament
could change that legislation. But as a matter
of federal practice, a conversation around the
GST should be a conversation with the states,”
says Sathanapally.
GST reform is interlinked with broader
changes needed to improve the tax,
economic and welfare systems. Fehily believes
this needs to be underpinned by a cohesive,
shared vision about what the community
wants Australia to look like by 2050.
“Without a clear direction, we risk
stagnation or aimless ad hoc changes driven
by political interests,” he says.
With no substantial tax reform
undertaken in Australia for many years,
the need for a staged approach is a
popular view.
“The government should develop
a five- to 10-year plan that includes
improvements in administration, as well
as permanent compensation and personal
income tax relief for lower earners,”
says Wong. “While raising the GST
may not be appropriate at this time due
to the cost of living, we should still consider
a pathway for future adjustments.” ■
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28 INTHEBLACK November 2025
A PLAN FOR IMPLEMENTING GST REFORM
CPA Australia has proposed a five-step plan to broaden the GST
to reduce overreliance on income taxes over the next two years.
1. Achieve consensus from state and territory governments that GST reform
is critical to future federal, state and territory budgets and must be part
of economic and productivity reforms.
2. Identify what a broadened tax base should look like and model the revenue
effects of changes to the rate.
3. Assess the impact of changes on business and society.
4. Develop tax settings that best rebalance the tax base to increase GST’s
contribution and reduce the income tax burden on individuals and businesses
while adjusting the transfer system to support the most vulnerable.
5. Design a thorough implementation program to ensure that individuals
and businesses are prepared for the changes.
