Following the release today of new NATSEM modelling outlining the impacts of potential GST changes on low-income and disadvantaged households, the ACT Council of Social Service calls on Chief Minister Barr 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 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 6.7% of their income, compared with 2.9% for the highest quintile.
ACTCOSS Director Susan Helyar said 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 ACT 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.
“For the lowest income households, 99 per cent would be worse off with an increase in GST and or a GST/income tax swap. 93 per cent of households in the next lowest income bracket would pay more for everyday goods. An increase in GST, on top of unaffordable housing, would throw even more low income households in our community into financial hardship, and increase demand for already over-stretched emergency assistance.
“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 ACT government to ensure this is a bottom line in any national tax agreement.”
ACTCOSS 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.
For more information or comment please contact
Susan Helyar, Director, on 0448 791 987 or 02 6202 7200.