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GST increase predicted to fund Rudd’s hospital spending spree



Australia's Goods & Services Tax (GST) is predicted to increase as pressure mounts on the Federal Government to fund its recent spending, including the recently minted COAG hospitals agreement.

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By David Olsen

Australia’s Goods & Services Tax (GST) is predicted to increase as pressure mounts on the Federal Government to fund its recent spending, including the recently minted COAG hospitals agreement.

GST COAG HospitalsWith the COAG health care reform package almost complete, the new focus on the Federal Government will be on how it looks to the GST, which has previously all gone to the states, as a source of Federal Government tax revenue.

Adrian Raftery, CEO of accountantsRus, said that the Federal Government has been putting forward a case to make some hard tax decisions to pay for the stimulus packages as well as an aging population and with greater control of GST monies they now have the opportunity to do so.

“They got to find the money from somewhere … and raising (the rate of) GST is an easy target,” said Mr Raftery.

“Now that they have wrestled back one third of GST revenue from the States I am just waiting to see a GST increase,” said Mr Raftery.

Adrian Raftery said that he wouldn’t be surprised to see an increase announced in the Federal Budget or via the much anticipated Henry Tax Review, which is set to be released prior to the Budget on May 11.

“We have been wondering why the release of the Henry Review has been delayed from the public for so long … perhaps we will know the reason why very shortly,” said Raftery.

Since its introduction in July 2000, politicians have always denied that an increase of the GST rate was on the cards but the head of accountantsRus says that doesn’t necessarily rule that option out.

“Once the legislation is in, it is very simple to get a change to a rate made … that is exactly what New Zealand did a few years ago when they lifted it to 12.5%,” said Raftery.

The rate of GST in Australia has always been 10% since it was introduced.

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