Australia’s Goods and Services Tax has remained at 10% since its introduction in 2000, but from time to time the idea of increasing it surfaces in political and economic debates. Raising the GST to 15% would mark one of the most significant changes to the nation’s tax system in a generation, and its effects would ripple far beyond the Treasury’s balance sheet.
The most obvious outcome would be a substantial boost to government revenue—likely in the ballpark of $30–35 billion a year. For policymakers, that kind of windfall offers possibilities: more funding for infrastructure, hospitals, and schools, or the chance to cut other taxes such as income tax to encourage economic activity. Yet the real challenge would be deciding how to distribute those funds in a way that feels fair to the public.
For consumers, the change would be harder to overlook. Almost everything subject to GST would cost about 4.5% more, from clothes to electronics to restaurant meals. While higher-income households might absorb the increase without major lifestyle changes, those on lower incomes would feel the strain. Economists often recommend pairing a GST hike with targeted compensation—welfare increases, tax rebates, or other support—to soften the blow.
Businesses, too, would have to adjust. Accounting systems and point-of-sale terminals would need reprogramming, price tags would be rewritten, and some sectors—particularly retail—could face a slowdown in sales as customers tighten their belts. Exporters, however, would be spared any direct impact since goods sold overseas are GST-free.
In the wider economy, a GST rise would trigger a one-off bump in the Consumer Price Index. The Reserve Bank might choose to “look through” that spike, recognising it as a once-only effect, but there’s always the risk that inflation expectations could drift higher, prompting interest-rate pressures.
Politically, the path would be fraught. GST is a regressive tax, meaning those on lower incomes pay a larger share of their earnings on taxable goods. Without well-designed offsets, any increase could spark a public backlash, leaving governments vulnerable at the ballot box.
And then there’s human behaviour. In the months before the change, many households would likely bring forward major purchases to beat the tax rise. Afterward, discretionary spending could drop, and the temptation for cash-only transactions to sidestep the higher GST might grow slightly.
In short, raising Australia’s GST to 15% would be a powerful lever—capable of strengthening public finances but also reshaping spending patterns and household budgets. Whether it proves to be a smart move would hinge on the political courage to implement it alongside measures that protect the most vulnerable, and the discipline to invest the extra revenue wisely.
