Bold plan to give you extra $3,300 a year
Ms Chaney has been working with Australian economist Richard Holden on a proposal to raise the GST from 10 to 15 per cent, and apply the tax to education, food and health.
In exchange for the tax hike, every adult would be paid $3300 - effectively wiping out the GST expenses on someone's first $22,000 of spending.
Ms Chaney and Professor Holden's plan has been submitted to the federal government to be considered at the productivity-focused economic roundtable, a summit to be held in Canberra from August 19 to 21.
'GST is an efficient tax – it is hard to avoid – and with lower and middle-income groups potentially better off under this proposal, it can be progressive,' Ms Chaney said. Kate Chaney supports the plan which would leave the lowest 60 per cent of income earners better off. NewsWire / Martin Ollman Credit: News Corp Australia
'Unlike personal income tax, it doesn't hamper productivity.
'Intergenerational inequity is built into our tax system - younger generations are facing the growing burden of funding an ageing population and will bear the cost of future interest payments to cover the structural deficit forecast for the next decade.'
The WA MP's plan has been costed and would raise an additional $95.2bn for the government in its first year of operation, minus the $3300 rebate to every adult.
Low and middle-income earners would be up to $371 better off, but the top-20 per cent of earners would be $2200 worse off.
All that leaves the government with an additional $24bn a year.
The Prime Minister and Treasurer have been hesitant in their language around GST reform leading up to the economic roundtable meetings. The economic roundtable meetings are being held in Canberra later this month. Mark Stewart / NewsWire Credit: News Corp Australia
'I expect that there'll be a whole range of ideas put forward, much of which is contradictory with each other,' Anthony Albanese said this week.
'It doesn't mean that they're government decisions we're making, because they're not.'
But Mr Albanese was more explicit in his language on Thursday. 'The only tax policy that we're implementing is the one that we took to the election,' he said.
While the current GST scheme is considered regressive, Professor Holden's plan is pitched as progressive.
'I'm a supporter of progressive taxation,' Mr Albanese told Sky News in July.
'Consumption taxes, by definition, are regressive in their nature. So that's something that you know doesn't fit with the agenda.'
Parliamentary Budget Office costings of Professor Holden and Ms Chaney's scheme show the bottom 60 per cent of income earners would be better with the GST hike and $3300 rebate. Food is currently exempt from GST - Professor Holden's plan would remove that exemption. NewsWire / David Crosling Credit: News Corp Australia
'Our proposal would make our taxation system more efficient, make our economy more dynamic and provide the impetus for productivity growth,' Professor Holden said.
'It is widely accepted that the GST is an efficient tax, but it is thought to be regressive.
'This plan shows that it doesn't have to be that way. By providing every adult Australian with a $22,000 GST-free threshold the GST can be both efficient and progressive.'
The government has promoted the roundtable meetings as being focused on productivity. The Australian Council of Social Services says the country's lagging productivity is widening inequality.
In the council's submission to the roundtable, chief executive Cassandra Goldie calls for reform to the tax system to raise more revenue, reduce inequality and drive action to address climate change.
'For too long now, people with plenty have been showered with tax breaks that pull investment away from productive purposes and rob essential public services of the revenue they need,' Dr Goldie said.
The council is advocating for changes to employment opportunities and streamlining income support.
'The extra revenue we need to fund care and community services, schools, and an income support system that protects people from poverty must come from those with the most capacity to pay - not those doing it toughest,' Dr Goldie said.
'We must better prepare and train people for jobs and finally lift income support to levels that don't trap people in poverty and destitution.'
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