Amid the ongoing political debate over the GST, a senior economist has called for the introduction of a card that would allow GST charges to vary in line with the holder’s income.
Professor David Hensher from the University of Sydney Business School says such a card would overcome concerns about the regressive nature of the GST and its disproportionately high impact on low-income individuals and households.
“What I have in mind is a separate card called the Australian GST [AGST] card,” he said. “It has to be separate from any credit or debit cards or rewards cards card since it will always be used under any payment regime [be it cash, cheque, direct debit, card, etc].”
The proposed card would operate at the point of purchase in the same way as existing swipe cards and would indicate a GST level of between 10 and 15 per cent based on federal Government means testing.
“At the point of payment an individual will show their AGST card [which is preferably like a driver’s licence and should have a photo and other details that are normally acceptable on such cards]. Built into the card is a code related to a prior means test [which might be via the same mechanisms as currently used by government], which indicates eligibility for a particular GST charge. It could vary anywhere from 10 per cent to 15 per cent on specific purchases and even be exempt on other purchases.”
Professor Hensher says the card could also be used to set a GST level in non-electronic cash and cheque transactions, with the amount recorded on a receipt.
NSW Premier Mike Baird recently proposed an increase in the GST from 10 to 15 per cent as a means of meeting spiralling education and healthcare costs.
