Grattan Institute proposes raising Australia's GST to 15%

The Grattan Institute has proposed a significant overhaul of Australia’s tax system to address rising national and state debts. The think tank recommends increasing the Goods and Services Tax (GST) from 10 per cent to 15 per cent and expanding its scope to include all food items, removing current exemptions for grocery staples.

According to the report, this change could generate approximately $76 billion annually. The institute suggests allocating $33 billion of this revenue to reduce income taxes for low- and middle-income earners, while $25 billion would be used to increase welfare payments, including JobSeeker, pensions, and rent assistance. The proposal aims to leave low-income single-parent families roughly $8,000 a year better off.

Grattan Institute CEO Aruna Sathanapally noted that there are ‘no easy paths back to budget sustainability’ and emphasized the need for smarter spending to support an ageing population. The call for reform coincides with concerns from MP Allegra Spender and other economic advisors regarding high levels of state and federal spending. The report also highlights that state government debt has more than doubled between 2019 and 2025, with interest payments now exceeding spending on housing and environmental protection combined.