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The Daily Aus

The 10% surprise tax that’s embedded in ALL Australian prices – aka GST

NSW Premier Dominic Perrottet holds some strong views on GST – “while there might not be that much public interest in GST reform, it’s GST that pays for our schools and our hospitals and our nurses and our teachers and our police officers”.

Let’s change that first bit – here’s an explainer on what GST actually is.

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Video Chapters

00:00 – Intro

0:13 – What is GST?

0:44 – What is taxed?

01:07 – Should it be raised?

01:44 – Outro

Transcript —

Before we start, remember this percentage and that GST stands for goods and services Tax. So what is GST? GST is a tax that is paid by consumers on most goods and services. The tax is then passed to the federal government by the business. For example, let\’s say you purchase an iPhone in Australia from the Apple store. 10% of the price of the iPhone is actually GST.

The iPhone\’s listed price is already inclusive of the 10% tax and you can actually see the breakdown on the receipt. Apple then pass the GST onto the government. The funds are then distributed back to the states and territories, not equally, but adjusted to reflect demographic and economic differences. There are some items that are exempt from GST. Basic goods and necessities are not subject to GST as governments typically want to make these as cheap as possible.

Things like basic food, some education courses, some medical health and care services, some mental products, medicines, childcare services, religious services and water. There have been calls over the years for the percentage of GST to be increased to 15%. These discussions eventually work their way into wider discourse about wealth inequality, Social Security and how tax collected by the Government is actually used.

There have been suggestions to use the additional money from a higher GST rate to go towards supporting low income households and additional funding for things like health and education. The 50% proposal, however, has also been met with criticisms with the Australian Council of Social Service, arguing that increase in the GST would disproportionately impact low income earners and could cost up to 7% of one\’s disposable income.

Australia\’s GST turns 21 this year and as discussions increase about raising it. It\’s really important to get your head around a tax that we all pay.

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