Following the release today of new NATSEM modelling outlining the impacts of potential GST changes on low-income and disadvantaged households, the NSW Council of Social Service calls on Premier Mike Baird to reject any tax deal or increase in GST unless:
- there is a broad tax reform package;
- the unfair income tax issues such superannuation concessions, capital gains tax breaks and negative gearing are addressed;
- the overall effect of the changes is progressive before compensation is considered; and
- the reforms tie in with federation reforms which guarantee service delivery.
The report by the University of Canberra’s National Centre for Social and Economic Modelling report shows that an increase in the GST rate to 15% off the current base would increase the average living costs of the lowest 20% of households by 7% of their income, compared with 3% for the highest quintile.
NCOSS CEO Tracy Howe the report showed clearly that increases in the GST will impact disproportionately on low-income and disadvantaged households.
“Tax reform should start by closing the loopholes in the progressive income tax system, and the NSW government should insist on this before any GST changes are contemplated.
“If we just increase the GST and cut income tax rates, people experiencing poverty will get left behind, despite any so called “no disadvantage” test.
“More than 99% of households on low incomes in NSW stand to lose from an income tax/GST swap. That is more than 700,000 NSW households paying more for everyday goods, and seeing few if any benefits. Over time the problem will get worse, as any “compensation” is eroded every year.
“We do need to reform our tax system to pay for the public goods and services like health and education that our community and our economy rely on, but that can and must be done fairly.
“We don’t think it is too big a call for any tax reform package to be progressive overall, and that is why we are calling on the NSW government to ensure this is a bottom line in any national tax agreement.”
NCOSS has also joined with Councils of Social Service in each state and territory, as well as the national body ACOSS, to call for legislated service guarantees as part of reforms to federation and tax arrangements to ensure access to essential community services for all regardless of their income and where they live.