The head of the nation\u2019s biggest lender has again called for GST to be increased, sparking a furious backlash from Pauline Hanson. <\/p>\n
There are growing calls, including from the OECD, for the nation to increase its goods and services tax (GST) from the current 10 per cent and use the proceeds to reduce its reliance on personal income tax.<\/p>\n
Such a move would nudge Australia\u2019s tax mix toward consumption and bring it more in line with that of New Zealand, where the GST is 15 per cent. <\/p>\n
The OECD has repeatedly recommended the move in recent years, and Commonwealth Bank is supportive, too. <\/p>\n
Asked on ABC radio last week if he would support a higher GST, CBA CEO Matt Comyn promptly replied, \u201cYes, we would\u201d. <\/p>\n
It comes after Mr Comyn also advocated sweeping reforms in 2024, arguing that income taxes should be simplified and the GST raised. <\/p>\n
Incomes up to $20,000 should not be taxed, the next tax bracket of up to $80,000 should be taxed at 20 per cent, then 30 per cent on incomes up to $300,000, and 45 per cent to anyone earning above that, Mr Comyn told a banking conference in Sydney.<\/p>\n
That would cost the government about $35 billion in revenue lost, which would need to be offset by other measures.<\/p>\n
To balance the lower tax receipts to government coffers, the GST would be increased from 10 per cent to 15 per cent. <\/p>\n
This would generate about $60 billion in extra annual revenue, he said.<\/p>\n
One Nation leader Pauline Hanson hit back at Mr Comyn\u2019s proposal on Monday, however. <\/p>\n
\u201cThat would mean more tax on power bills, petrol, nappies, toilet paper, school shoes, insurance and home building materials,\u201d she said of a GST hike. <\/p>\n
\u201cOnly someone completely insulated from the cost-of-living crisis could think Australians should pay even more for everyday essentials and the materials that build homes.\u201d<\/p>\n
Ms Hanson mentioned a global Mastercard outage over the weekend that had left Mastercard-linked Commonwealth Bank cards and mobile wallets impacted by the disruption. <\/p>\n
\u201cMeanwhile, the payment network went down over the weekend, leaving Commonwealth Bank customers unable to pay for their power bills, petrol, nappies, toilet paper, school shoes, insurance or home building materials,\u201d she said. <\/p>\n
\u201cPerhaps Commonwealth Bank should spend more time making sure its customers can actually make payments and less time pushing the Treasurer to make everything they buy more expensive.\u201d<\/p>\n
AMP Chief Economist Shane Oliver was supportive, however, pointing out that raising GST would require \u201ccompensating people with lower income tax rates and higher pension and welfare payments\u201d.<\/p>\n
\u201cMost economists would put a rebalancing of the tax system in favour of the GST and away from direct taxation as a number one priority… I think it makes economic sense to do it,\u201d Mr Oliver told news.com.au.<\/p>\n
\u201cA GST is a relatively efficient tax, whereas income tax does distort people\u2019s economic decisions. We\u2019re heavily reliant on income tax compared to other countries.\u201d<\/p>\n
Income tax was more likely to alter behaviour because it directly changed the reward for working and earning, while a broad GST applied more evenly to spending, he said.<\/p>\n
While he supported the reform in principle, he thought it was politically very hard to get through.<\/p>\n
\u201cIt can cause a bit of political consternation trying to make that change, which is why politicians tend to shy away from it… Politicians choose which bit of it they don\u2019t like and then they inflame that bit,\u201d he said.<\/p>\n
\u201cIt\u2019s messy. It\u2019s hard to see it getting done, to be honest with you. In the absence of a serious crisis demanding serious reform, then we probably just drift along without doing such things.\u201d<\/p>\n
The GST was introduced in Australia in 2000 at a flat rate of 10 per cent under the Howard-Costello government. <\/p>\n
It replaced the old federal Wholesale Sales Tax and several inefficient state and territory taxes.<\/p>\n