Prof Robert Breunig says if the tax system is not reformed, the burden of repayment will fall on young people.
Breunig, who leads the Australian National University’s tax and transfer policy institute, has warned Australia’s over reliance on income and corporations tax will see the bill “fall very heavily on the future incomes of young people, which will now lower as a consequence of the pandemic”.
The Morrison government has spent $214bn in three economic stimulus and support packages, including $130bn of wage subsidies, dwarfing the fiscal response to the global financial crisis.
Deloitte Access economics has suggested that – as Australia did after the second world war – the government can simply shrink the debt as a proportion of the economy by returning to economic growth because austerity “rarely makes sense”.
Deloitte estimates that – given the record low borrowing cost – the annual interest bill on new borrowings will be $1.6bn, which could be paid by raising the Medicare levy from 2% to 2.14%.
Because it “has the extra benefit of taxing people’s accumulated wealth as they spend it”, so Breunig supports increasing the GST.
Asked about the stage two and three income tax cuts, legislated in mid-2019 after the re-election of the Morrison government, Breunig warned the government “may have to delay them if it can’t replace the revenue from other sources”.
On Sunday, McCormack said “the recovery out the other side is going to need tax reform and did not rule out the possibility of increasing GST.
Australia Will Need To Raise Gst To Pay Coronavirus Debt, Tax Expert Says
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