CHART OF THE DAY: Proof Australia Should Increase And Broaden The GST

Getty: Jonathan Ferrey / Stringer

If there has ever been proof that the GST in Australia should be increased, it is contained in all 58 pages of the Grattan Institute’s report into the Wealth of Generations.

The full report shows that older Australians have accumulated the wealth, had the benefits of government largesse over the past decade accrue to them and as they exit the workforce, they are paying less tax.

So the burden of their care falls on the working age population and increasingly the poorer younger Australians.

But, one chart sticks out as showing that a sensible way to redress these changes in wealth and taxation that Australia is undergoing, as a result of the housing boom and an aging population, may be to increase and broaden the GST.

Older Australians are increasing both their wealth and expenditure, yet doing it in an untaxed fashion.

As more Australians slide into the over-65 cohort, a first step, and a fair one, to address the compositional imbalance between wealth and taxation and spending would appear to be an increase in the GST to capture these untaxed gains by older Australians via their spending.

That would spread the burden of their care from just the working age population to older Australians themselves.

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