A political commentator recently noted Federal Treasurer Scott Morrison stated the Australian government has “ … a spending problem, not a revenue problem”.
Currently, Australia is spending approximately $100 million a day more than revenue generated. For Australia, if the global economy slows in 2016 and our revenue from exports drops further, revenue will more than likely fall and this daily shortfall will increase. A challenging prospect for any government.
It would seem the Australian government has a fairly simple choice to make on a relatively complex matter:
• spend less, or
• raise more revenue.
Hence increasing the GST to 15% has been introduced into the conversation. The topics that could be raised around this proposed increase are certainly thought-provoking;
Resistance by voters to the “hip-pocket” impact of increasing the GST to 15% may achieve what is required, a focus on where the Australian government is currently spending money. Particularly interesting is what the end game being played by our government led by Malcolm Turnbull will actually be.
So … it appears GST reform is on the way, and it may arrive much sooner than we think. Whether that be simply increasing the rate from 10% to 15%, or applying 10% GST across the board: including medical, education and fresh food.
If an across the board GST rate of 10% is applied, the impact for SME’s will vary. Potentially easier for some businesses, convenience and grocery stores in some respect for example, but more difficult for medical professionals and education/training centres.
Let’s hope the idea of raising the GST to 15% doesn’t simply deteriorate into an acceptance of raising more revenue, rather than better and more efficient spending of government funds.
Time will tell.