Australian budget squeeze puts GST rise back on the table
- May 16, 2014 | Richard Asquith
Plans by the Australian federal government to save some AUS$ 8billion per annum have reignited the debate over increasing the Australian Goods & Services rate from the current 10%.
The recent ‘crash through’ budget plans from Prime Minister Tony Abbot have deliberately focused on cuts to health and education to force through a rise in state GST. He stated publicly after this week’s budget that if states wish to continue with the current level of expenditure, they will have to increase the current 10% rate. New Zealand currently has a rate of 15%, while the average vat rate in the European Union is over 21%.
The strategy to push the funding requirement onto consumption taxes is seen as the only way to move away from high corporation tax levels which discourage job-creation. Queensland and NSW have already been highly critical of the surprise cuts.
The Australian budget also contained a reduction in the Corporation Tax rate of 1.5% for small businesses from 2015 and the abolition of the minerals resources rent tax which also needs funding.