When it was introduced 25 years ago, the GST was lauded as the tax which would fund state services like health, education, roads and policing for generations to come.
But with the share of goods and services subject to GST shrinking – a phenomenon which has been accelerated by the cost-of-living crisis – state and territory budgets are being starved.
If GST revenue were to grow at the same pace as the economy, as planned, it could pay for:
- NSW's Metro West rail project in three years
- Victoria's West Gate Tunnel project in two years
- Queensland's Borumba Pumped Hydro project in three years
- WA's Metronet Rail project in just over four years
- SA's Torrens to Darlington road project in just over five years
- Tasmania's Marinus Link project in less than four years
- The NT's Art Gallery in just over a month
- The ACT's light rail to Woden in three years
"If the GST worked properly, these projects could be fully funded and built much more quickly and without states constantly having to beg for more funding, or cutting funding to other essential services," said Matt Grudnoff, Senior Economist at The Australia Institute.
"Australians are being squeezed so heavily for things like mortgages and rents, which are not subject to GST, they have very little left over to spend on things which are subject to GST.
"The end result is that GST revenue is falling further and further behind expectations.
"This is money that would and should go to hospitals, schools, roads, police and other essential state services.
"The entire tax system needs reform, including the GST. Applying GST to things like private health insurance and private school fees would be a good start.
"We could also tax the exports of natural resources which are currently given away for free. Scrapping the fuel tax credit scheme, under which taxpayers pay for the diesel used by mining companies, would raise $11 billion a year alone.
"There are plenty of things we can do to fix this. We just need brave governments and meaningful reform.
"In the meantime, states and territories are being forced to cut spending and borrow more, while schools, hospitals and public transport infrastructure crumbles."
