The Coalition Government’s proposed amendments to the GST have been attacked for disproportionately impacting low-income households. But the GST doesn’t have to be so regressive. By extending the tax to include private health insurance and private education, the government can boost revenue, broaden the tax base, and do so in a way that does not overburden Australia’s poorest families.

This paper looks at the potential gains and impacts involved from extending the GST to private schools and private health insurance. As the predominant consumers of private schools and private health insurance are higher income households, broadening the GST to include taxes on these services could raise $2.3 billion per year in additional revenue without heavily impacting upon low-income earners.

At a time when the government faces a tough challenge bringing the budget back to surplus, and an even tougher challenge of winning the public’s acceptance of cost-cutting and revenue raising measures, strategic reform to the GST could be just the policy to bring to the table.