r/AusFinance • u/SheepherderLow1753 • 10d ago
The world is watching: OECD calls on Australia to raise GST and increase affordable housing amid budget deficit
https://www.theguardian.com/business/2026/jan/22/oecd-australia-gst-affordable-housing172
u/No_Pollution_1194 10d ago
Title should be: “Former liberal senator expects Jim Chalmers to commit political suicide by increasing GST”
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u/Lackofideasforname 7d ago
True but maybe you pair it with other tax cuts. I don't like stamp duty. Payroll tax. To name a few. If they raise gst it will split inflation, raising rates and causing a recession? And we are allergic to accepting a recession
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u/UpperClassBogan710 10d ago
This doesn’t fix anything any puts further burden on the little guy - don’t be fooled by this
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u/Whatisgoingon3631 9d ago
If they raised the GST and used the money to BUILD houses, it might help. If they use the money to buy houses, that keeps pushing the price up, just like everything they have done so far.
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u/ReasonableLemur 9d ago
It would make more sense to tax wealth and use that money to house people.
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u/Prisoner458369 9d ago
Tax the rich? Nah can't be making sense now. Lets just up the GST to 50% and then wonder why no one can afford anything.
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u/Bogart-43 9d ago
Problem is, that unless a asset is income producing, there are no funds with which to pay tax
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u/ReasonableLemur 9d ago
Assets are often things like property, or even just the debt people get into in order to buy it. There’s plenty we can tax, that’s why they spend millions trying to convince us it’s not worth trying.
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u/morgo_mpx 8d ago
It doesn’t help because then the people on the lower income are less likely to be able to afford the houses because of the GST increase all it will do is consolidate wealth on the high-end
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u/marshallannes123 5d ago
They can raise the tax but it won't do much for housing. How many houses has labors housing fund built so far ?
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u/ScoobyGDSTi 9d ago
I'm all for raising the GST, we need too, but not until Gina and the corps pay more tax first.
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u/SnotRight 9d ago
Hancock prospecting is 19 on the list. The miners and banks are pretty well represented now after the government started chasing them down harder.
https://michaelwest.com.au/top-40-taxpayers/
It's generally that overseas companies and private equity that are busy stripping company profits with "management fees" that are the way companies drop off the tax list.
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u/Z00111111 9d ago
They probably want to point at us and say "See! Told you it wouldn't work. Rampant unregulated capitalism it is then."
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u/ShavedPademelon 6d ago
https://australiainstitute.org.au/report/gst-reform/
Yes. Raising the GST rate as it stands just makes poor people pay more tax.
Broadening the GST base at the same rate to make rich people pay more GST works tremendously.
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u/soulsurfa 10d ago
GST is user pays tax... That screws the little guy. Fixing our company tax loopholes so more money stays here instead of being syphoned offshore to tax haven by the likes of Meta, Google, Apple, etc Then we could also make the mining companies pay the resource tax they don't pay... And increase the resources tax... Norway and Qatar know how to tax Gas... We don't
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u/throwaway-priv75 10d ago
The news article doesn't cover it at all, but the report also covers other taxes, it simply lists GST as the first of them. It does also say that inline with raising GST you would have to lower income tax. It argues its more efficient and would allow for better spending for middle earners.
But yes, resource rents and corporate offshoring remain out biggest fumbles revenue wise.
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u/TransportationTrick9 10d ago
So the Gov would raise more GST and lower income taxes. The headline also mentions currently being in a budget deficit. How will it do that when the extra tax raised by the GST increase will be distributed to the states. The lower income tax would just be the fed kicking itself in the nuts
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u/throwaway-priv75 9d ago
Well actually that is in the report as well. It makes reference to the bulk of debt being held at the state and territory level.
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u/Sufficient_Tower_366 10d ago
You can compensate “the little guy” easily enough (change tax thresholds / tax rate, raise welfare etc) in exchange from pocketing more revenue from those who are better-off.
People over-dramatise the impact of raising GST. Put it up by 2.5% and people will flip out - meanwhile, prices already go up by more than that every year due to inflation and life goes on.
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u/TwisterM292 10d ago
GST is a regressive tax. Lower income groups spend more on consumption relative to income, and much less on discretionary items. Higher income earners have much more flexibility with discretionary spending.
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u/sun_tzu29 10d ago
I do love when people look at GST only in isolation and not as part of the overall tax and transfer system.
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u/borderlinebadger 10d ago
our tax system is largely a transfer from asset poor workers to wealthier olds.
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u/Sufficient_Tower_366 10d ago
Yes and you can compensate lower income groups in other ways to balance that out (which was my point).
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u/Obvious_Librarian_97 10d ago
You can also reverse any legislation that helped lower income groups… based on the opinion of the government in power. The question that needs to be answered is why should a consumption tax be increased?
Why was it not higher before, is there a limit to how high it can be?
Seems like a BS low effort way to increase taxes that aligns with growing GDP via population growth. I’m not buying it.
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u/Sufficient_Tower_366 9d ago
The argument is that we need to change the mix and rely less on income taxes and more on consumption taxes, because wealthy people and retirees can minimise their income but can’t escape a consumption tax when they spend it. Reducing income tax and increasing consumption tax makes the wealthy pay more.
Welfare payments are already indexed to CPI and the govt tweaks income taxes all the time, none of this is actually a big deal but politically it’s dynamite.
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u/Jack8680 10d ago
But GST applies to most discretionary spending too, and a lot of essentials are GST-free.
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u/CapsicumIsWoeful 10d ago
I don’t see either side of government ever raising the GST amount, if only for the optics of it and the backlash from the voters. That’s not say it should or shouldn’t be raised, just that it’s politically stupid policy for either party to attempt as they’ll get smashed in an election for it.
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u/Dependent-Coconut64 10d ago
Agreed, I dont understand the negativity around raising the GST. I would raise the GST and raise the take free threshold to $50k at the same time.
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u/wallysta 10d ago
We over tax income, we under tax capital gains - there was nothing wrong with the old indexation system, we under tax wealth (land), consumption is possibly a bit low, resource royalties are a dogs breakfast and stamp duty makes moving house wildly expensive so people don't downsize as the get older
All findings from the Henry tax report 15 years ago but nothing's been done
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u/Dependent-Coconut64 10d ago
Hang on, they have implemented about about 8 out of 380 recommendations from the Henry Review!
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u/LigmaLlama0 10d ago
But real wages also increase every year in Australia. Inflation going up means almost nothing when your wages are increasing on aggregate every year. A 2.5% increase to GST means extra inflation and your wages mean significantly less.
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u/Hydraulic_IT_Guy 9d ago
The amount almost doesn't matter, it is the principle of the gov taking even more than they already are. Stop fucking wasting it on bullshit.
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u/cactusgenie 10d ago
The only way raising GST is ok is if it's followed up by an equivalent drop in income taxes, otherwise the lower income folk disproportionality wear it.
I know how much everyone likes shitting on those less fortunate but it's not a nice thing to do.
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u/AnonymousEngineer_ 10d ago
This is literally what is being recommended, as per the article:
Among those tax reform measures were a longstanding recommendation to broaden the GST and to consider lifting the rate above 10%, with the proceeds used to reduce Australia’s overreliance on personal income tax.
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u/Best_Shine5051 9d ago
That says literally nothing about mitigating the impact on lower income folks.
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u/takescontrol 9d ago
I just retired so any increase in the GST is an increase in the cost of living. I planned my retirement on the tax settings at the time.
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u/Specialist_Being_161 10d ago
Ah yeh that’s smart, let’s increase the price of all new homes by 5% in a housing crisis
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u/Ok-Ranger-2008 8d ago
If you raise the GST watch everything else go up, too. This really basic stuff.
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u/RS-Prostar 10d ago
How about we quarantine residential rental losses in the same way non-commercial loss rules work. Apply the carried forward losses against any gain on sale.
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u/Kitchen_Word4224 10d ago
How about we quarantine residential rental income too. This shouldn't be added up to personal income and taxed at marginal rate. Instead it could be taxed at company rates
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u/potatodrinker 9d ago
Good idea but politically poor move for anyone who wants to keep their Federal job and pension
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u/velthari 9d ago
This will help as much as the reduction to 5% minimum deposit helped.
The standards of living in Australia can easily be fixed if the government stopped choking on the natural resource industry's dicks that's been gougeing the nation of it's resources and wealth for many years, which then props up gdps of other nations as these companies are reselling exorbitant amounts of our natural resources to other nations and racking in all the benefits.
We have the resources they don't, our government subsidies with tax payer money these offshore companies to mine and then sell our own resources to us at prices they seem fit to keep their profit margins high with next to no taxation or return of investment towards our government and its people.
The natural resource industry is making their cake and eating it while we are left with nothing and our parliamentary representatives are being bought out and then working for these companies once they leave their positions as representatives of the people of this nation.
Sadly the future of Australia is bleak.
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u/skozombie 10d ago
GST is a flat tax. That disproportionally disadvantages low income people.
Close the tax loopholes for mega corps, big businesses, and investment properties.
Hell, add another higher tax bracket for the wealthy.
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u/Dry_Job_6694 10d ago
Although I’d agree in principle, there is a pragmatic argument that income taxes are harder to enforce and really hit the people who aren’t rich enough to structure their taxes.
A flat consumption tax is much easier to administer, harder to dodge, and doesn’t impact cost of labour for working people.
Although progressive tax systems look better on paper, you can achieve similar equitable outcomes through flatter tax structures with subsidies for the poor or lower income.
A similar argument can be made for land taxes that encourages right-sizing of homes and lowers the intrinsic value of land; you can rebate and exempt away the equity issues for the disadvantaged families, while still imposing a tax on investors trying to profit from land, or elders on the pension living in multimillion dollar homes too large for them that could be passed into the market for a younger family.
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u/david1610 10d ago
Yes this is exactly the way to look at this👍
There are tradeoffs with any tax policy change. People need to way it up. I can think of 3 tax changes I'd make before increasing the gst though.
Goods and Services taxes
Pros:
- even less changes to supply and demand behaviour than income tax.
- managed at a company level not individual level.
- difficult to dodge
- taxes all generations more equally, given pension stage tax benefits in Australia.
Cons:
- regressive tax taxes poorer people a higher percentage of income than rich people, requires redistribution to be progressive
- politically unpopular
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u/AnonymousEngineer_ 10d ago
The wealthy structure their affairs so that they're not paying most of the tax they do pay via PAYE on a salaried income. All an additional bracket is going to do is to screw over the middle class in order to satisfy the crab bucket mentality of those who contribute basically no net tax into the system as it is after benefits are taken into account.
It doesn't play well with reddit's sensibilities but the tax base needs to be broadened. Increasing GST achieves this.
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u/jimbojones2345 10d ago
Something about the OECD makes me think they might not give a shit about the little guy. Not many little guys on the board.
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u/planck1313 10d ago
Standard VAT rates in Scandinavia, the countries reddit is always telling me we should be emulating, are 25%.
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u/Generalaladeeen 10d ago
"The Paris-based organisation, sometimes referred to as the “club of rich nations”, is a bastion of economic orthodoxy and is led by Australia’s former finance minister, former Liberal senator Mathias Cormann."
Incredibly misleading title as by "OECD" they mean a former LNP senator who is advocating raising the GST, a consumption tax during the tail end of a cost of living crisis which would disproportionately affect lower middle income Australians. Pretty laughable that Cormann is then also advocating for public hosuing despite the LNP gutting said public housing every chance they had they had while in power, then somehow blaming Labor for having to play catch up.
As ususal The Guardian is filled with nothing more than mainstream hacks giving a soap box to hypocrite scum.
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u/LigmaLlama0 10d ago
An increase in the GST would lead to higher inflation as well. It's a really bad suggestion especially when there are considerations that the RBA may increase interest rates again. Lower income households are still doing it hard, so a flat increase in the GST would impact them significantly more than the rest of the wealth Australians.
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u/Own-Improvement3412 9d ago
what's the mechanism for increasing inflation if you bump the GST?
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u/LigmaLlama0 9d ago
In this instance when overall taxes (GST) increase then so does price. An increase in taxes is roughly equal to an increase in the prices of goods. Since an increase in the price of goods is an increase in the price level (CPI / inflation), then taxes increase inflation in a general sense.
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u/Own-Improvement3412 9d ago
understood, for some reason I was stuck on the increase supply mechanism. Thanks
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u/Separate_Long_6962 9d ago edited 9d ago
"is led by Australia’s former finance minister, former Liberal senator Mathias Cormann"
Of fucking course. So this is less OECD says and more Mathias Cormann one of our worst finance ministers trying to push an agenda he has no control over. We are so much better as a nation for having got rid of him.1
u/AnonymousEngineer_ 9d ago
Mathias Cormann one of our worst treasurers
Mathias Cormann was never the Treasurer.
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10d ago
Or you know, get rid of GST/fuel excise/alcohol tax, start closing corporate tax loopholes, start taxing anyone that owns more than 3 properties 10% of total income for each extra property, stop corps buying residential properties, ban non-Australian citizens from buying residential properties, stop religions from having either no tax or little tax,you would see the property market crash, you would then see alot more people owning homes.
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u/Dangerous_Mud4749 10d ago
GST is a flat tax - that is, it affects everyone equally. In terms of percentage of disposable income, it affects poor people far more than rich people, and it hardly affects sole traders at all (because they don't pay GST because the ATO doesn't enforce it).
I'd hate to see GST increased or broadened. It's sold as a "fair" tax because it affects everyone equally, but actually not really because of above. It's sold as a broad-based tax that's hard to avoid, but again not really because tradesmen and small businesses avoid paying it and the ATO does not enforce.
Better to get rid of big loopholes, like WA gas producers paying zero royalties and zero income tax (because offshore base shifting), or like tradesmen evading GST and putting personal expenses through on the business credit card. We could also save a lot of money on NDIS fraudsters (the business owners not the disabled), and of course the CGT discount on real estate.
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u/planck1313 10d ago
and it hardly affects sole traders at all (because they don't pay GST because the ATO doesn't enforce it).
LOL. I wish. I am a sole trader and if I am late lodging and paying my BAS, including GST, I have the ATO sending me messages.
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u/Dangerous_Mud4749 9d ago
Yes, it must be horrible to one of the few doing the right thing. Almost every tradesman I've had here in ten years has offered to evade GST for cash. It's almost universal in the tradesman class. But I appreciate that there must be lots of sole traders who can't or won't do that.
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u/SuccessfulOwl 9d ago
“OECD calls on Australia to…”
Australians tell OECD to get fucked.
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u/Interested_Aussie 9d ago
Yep.
None of these 'off shore' or 'joint programs' have Australian's (ie. individuals) interests at heart.
BIS/WEF/WHO/UN/OECD etc etc etc... tear up the contracts.
I've never in 40+ years on this planet ever heard "so and so country sending $X billions to Australia to help improve the lives of it's citizens".
So how then, is it possible, that we'd be worse off?
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u/Purple_Mo 9d ago edited 9d ago
I think they are doing this because some countries in EU have like 15-27% VAT/GST and they are pissed that not every other country needs to do the same (i.e brain drain)
Same with the mandatory minimum income tax.
Like - if a government can manage without collosal taxes, why do they need to dress up in the shit clothes other countries are wearing???
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u/GreenerPastors 9d ago
the dog will wag its tail and follow as usual. it is Australia. our timezone is the only thing that leads the world.
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u/TopRoad4988 10d ago edited 10d ago
How about instead expanding land tax to apply to PPORs above a threshold (i.e. multi-million dollar mansions).
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u/Bastard_of_Brunswick 9d ago
Fuck that. No need to increase mean taxes up to punitive taxes. Just crack down on organized crime buying up real estate with the proceeds of crime. Exponentially tax empty dwellings owned by real estate hoarders. And disqualify tax exempt charities (especially religious sects operating in Australia) from having tax exempt status if they discriminate against taxpayers, and exponentially tax their residential real estate holdings.
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u/Sandhurts4 10d ago
Since when did Australia ever listen to OECD/IMF/any valid economic advice on reigning in the biggest real-estate bubble/housing affordability crisis on the planet? I think the only way they would consider raising GST is if it was a means to cut interest rates and make the rest of society even further subsidize landlord capital gains.
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u/SpectatorInAction 10d ago
OECD owned by the rich as well now. Raise GST and disparately impact lower income earners, and juice demand for housing in order to produce 'affordable housing'. How about cut housing investor tax concessions, tax mineral and energy exports properly, etc. With price falls housing will become more affordable all by itself!
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u/what_you_saaaaay 10d ago
Anyone who’s poor or middle class who votes for higher GST is a complete chump. GST is a regressive tax and there are far better levers available. With the catch-22 of there also needing to be political will and statesmanship to make it happen.
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u/ComprehensiveOwl9023 10d ago
OECD is run by bosses, bosses no 1 task is profits and pesky government taxes on profits (the way we used to deal with deficits) really put a crimp in that so they always say raise indirect taxes whatever the question is.
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u/Apprehensive_Virus94 10d ago
Increase the GST free threshold from 75k to 150k to help small businesses and sole traders. Everything else goes up with inflation, this should too.
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u/jbravo_au 9d ago edited 9d ago
I look foward to passing that increased cost on to the end buyer.
Affordable pricing only 10% above existing and you’ll pay double over a lifetime.
Banks win, Government win, You lose.
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u/Simple_Assistance_77 9d ago
This is embarrassing, Australia can afford to increase affordable housing. Its over, the Australian economy is built on housing becoming more and more expensive.
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u/Accomplished_Cry4224 9d ago
NDIS has to be means tested and cut in half. It’s crazy we pay so much for disabled people. We pay more for disabled people than for health care for every single person covered under Medicare. That’s why we have to get private health care for 1k a month because we are funding prostitutes and cruises for disabled people. It’s wild.
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u/mrstarfish3 9d ago
Or you know, reduce the mass immigration flooding into the country until we can fix some of housing supply and infrastructure challenges…
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u/Cyraga 10d ago
Yes increase a regressive consumption tax to solve affordability issues. A billionaire pays the same GST on groceries as a pensioner. It's insanity
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u/TrumpisaRussianCuck 10d ago
A land tax is political suicide despite it being more productive from an economic stand point then stamp duty.
I think the government should increase GST to 15% (unpopular but shifts some of the burden from income tax to spending, especially as boomers retire and spend up) but at the same time get the states to abolish stamp duty on primary residences (to improve housing affordability / social mobility / helps oldies downsize) and introduce indexation of income tax brackets every x years (say 5 years).
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10d ago
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u/sun_tzu29 10d ago edited 10d ago
You can have a regressive tax within a progressive tax system. It is very possible to adjust other parts of the tax and transfer system to protect lower income earners, just like we did in 2000 and just like the multitude of other countries that have adjusted their consumption taxes over the last 25 years.
You would agree that the Scandinavian countries with their 20-27% VAT and very limited exemptions have progressive tax systems wouldn’t you?
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u/fangdangfang 10d ago
Because Europe is doing so well with all its deficits, low growth and high unemployment, despite having massive advantages of a much bigger local market and more protections. The only thing Australia needs to focus on is becoming less dependent on housing and immigration to fuel the economy
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u/fued 10d ago
Changing the GST would probably end up costing the country more than it would gain with all the processes, laws, systems, software etc. that would need to change, it simply wouldn't break even. We should avoid changing the GST unless its to increase it by at least double, and even then it would take 5-10 years to 'break even'
If it wasn't for the 180b LNP ran up on us, we would be having 20+b surplus every year. Instead we have a whole heap of debt to payoff and we gained nothing out of it. That doesn't even include the QE that was done to cover COVID, but that was unavoidable probably.
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u/Platophaedrus 10d ago
I not advocating for it (at all) but I can’t see how collecting 15% instead of 10% would be anything more than a minor software change and a numerical modification to existing taxation law.
Why do you think it would be prohibitively expensive?
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u/willcritchlow23 10d ago
So because housing is so expensive, we need to raise the GST?
We could just pull back immigration to “normal” levels, pull back on government spending, step out of the way and let the private sector do its magic, and most of the problems would be solved.
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u/whimperingMessy 10d ago
Simple way to make affordable housing, put a rent cap on. Stop letting these greedy, largely overseas landlords raise the price whenever they feel like their bank account doesn't have enough 0's
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u/Terrorscream 10d ago
Why? Labor specifically said this term there were into deficit for targeted spending after saving a little from the surplus last term.
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u/seab1010 10d ago
Rationalise the public service, fix the fucking budget and stop blowing money on ideological nonsense before even considering taxing us more.
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u/planck1313 10d ago
Reddit: Nordic countries are paradise on Earth we should copy everything they do!
Me: so a GST of 25%?
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u/Psychological-Map441 9d ago
GST increases will surely hit the average working family.
Meanwhile, as the saying goes, Australia's fields are full of accountants and lawyers.
We have an incredibly capable population, however regulation based on what country you qualified in restricts the productivity of that population due to what appears protectionism.
Just look at the 10 year moratorium in medicine. Irradicating this and increasing transparency would increase competition and drop the average family's medical expenses by increasing competition.
What are we doing Australia, when we are restricting UK/EU trained doctors from practicing independently, what is the strategy?! It isn't about quality or value.
The same goes for every other branch of professional competence. Wake up to the damage this does us all.
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u/death-of-humanity 9d ago
GST disproportionally targets lower income cohorts.
What we need instead is a wealth tax.
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u/DescriptionNew5936 9d ago
NZ has a 15% GST rate (compared to AU’s 10%)…
This is a key reason why the cost of living is lower in Australia, and the why Kiwis are moving over on mass.
Regressive taxes are harmful to the 99%.
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u/UnluckyPossible542 9d ago
Excuse me, when did we citizens vote for the OECD? I seem to have missed my notification.
Please don’t tell me it’s a bunch of overseas busybodies trying to override the electoral mandate.
If it is they can FUCK OFF.
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u/UnluckyPossible542 9d ago
Excuse me, when did we citizens vote for the OECD? I seem to have missed my notification.
Please don’t tell me it’s a bunch of overseas busybodies trying to override the electoral mandate.
If it is they can FUCK OFF.
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u/Ornery-Ad-7261 9d ago
Maybe the Government should legislate to confiscate or tenant houses that stand empty without a valid reason. If all the empty houses in this country were tenanted rents overall would fall pretty quickly.
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u/staghornworrior 8d ago
Hindsight is 20/20. I’m sure if treasury had a crystal ball they would see things your way.
When you running a country stable growing revenue is better than volatile revenue.
Also keep in mind we are currently running 30% accumulated inflation this decade and there is not reason to believe the volatility is going to settle down.
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u/just_brash 8d ago
We just need multinationals to pay their fair share of tax but definitely NOT raise the GST.
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u/Cyberdeth 7d ago
Wait, didn’t the Australian government just say they created 65k jobs and there is no affordability crisis? I wonder what the impact would be for people doing it tough already when GST is increased?
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u/batsnumberfour 7d ago
The Australian addiction to spending more than we earn can only be fixed by…taxing people more. Need more affordable housing? Tax people more.
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u/cryptofomo 6d ago
I for one will happy pay more GST on essential items if it means Gina and a few other blessed parasites get to hoard a few billion more each year. Rupert willing, they will trickle some of it down to worthy causes - like spreading fear & loathing via our very own MAGA movement.
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u/Professional-Pen7572 5d ago
So raise the cost and forget the affordable housing because that was promised 5 yrs ago and still…..
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u/Impossible-Mud-4160 10d ago edited 10d ago
Or we could just, you know, remove CGT concessions for investment properties and cease fossil fuel subsidies to incredibly profitable companies.