Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Hansard source

because they will spend a larger proportion of their income on goods and services that are subject to the GST. So its advantage is its efficiency—it does not distort economic activity. Its disadvantage is that it is seen to be regressive, although it is fair to say that recent studies indicate that it is not as regressive as was once thought years ago. But, nonetheless, we accept that it has a certain regressive nature. It is not a progressive tax, like income tax.

Therefore, there have always been advocates for having less of our tax revenue—'our' being all governments—levied from personal income tax, from direct taxes, and more from an indirect tax, a GST, or VAT or call it what you will. The challenge with a GST or a VAT is to ensure that lower-income households are properly compensated. That was clearly part of the design in 2001. It was part of Labor's own government design when they imposed a similar broad-based tax on energy—the carbon tax. And, of course, if there were to be in the future any change to the GST, equity and fairness would be absolutely foremost.

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