Teal politician Allegra Spender from Australia’s richest electorate calls for higher GST so income tax can be reduced

A teal independent MP representing Australia’s wealthiest electorate has called for an increase in GST – arguing it would be fairer to the young.

Allegra Spender, who manages Sydney’s eastern suburb of Wentworth and serves the ultra-exclusive Vaucluse and Point Piper, has suggested the 10 percent rate for the goods and services tax is too low.

“I believe everything should be on the table: GST should be on the table,” she told ABC Insiders host David Speers on Sunday.

Ms Spender, a first-term MP with a former Liberal electorate, said Australia was too dependent on income tax revenue generation to support its aging population, arguing that this was unfair to the young, working-age population .

“Young people feel let down by the tax system, by the housing system, and I think the tax system has a role to play in addressing that,” Ms Spender said.

“Let’s have some of that big talk.”

Ms Spender’s suggestion to raise the GST came a week after the Business Council of Australia, the lobby group for top millionaire executives, called for a higher consumption tax.

However, raising the GST would disproportionately affect the poor; the level would remain unchanged since its introduction in July 2000, with exemptions for fruit, vegetables and bread.

Mrs Spender’s electorate is so wealthy that it covers five of Australia’s top ten postcodes for taxable income, with individual averages of more than $200,000.

Her argument about raising the GST is based on cutting income taxes, which make up more than half of federal government revenue.

“I see a real challenge in our reliance on income tax – it’s at an all-time high,” she said.

“That’s based on the fact that there are fewer and fewer people of working age in the population.”

The Treasury Department’s Intergenerational Report, published last week, Income tax revenue is expected to grow from 50.5 percent of total tax revenue in 2022-2023 to 58.4 percent in 2062-2063.

That forecast includes the phase three tax cuts that will take effect in July 2024, which will reduce the number of tax brackets from five to four for the first time in four decades, and give those with $200,000 back $9,075.

Others have previously called for higher GST to generate more revenue for government services.

In 2015, former South Australian Labor Prime Minister Jay Weatherill and his New South Wales Liberal counterpart Mike Baird advocated an increase in GST.

Tony Abbott, as Prime Minister, supported their call in July of that year, based on the idea that a higher GST would give the Commonwealth Grants Commission more money to distribute among the states and territories.

But two months later Malcolm Turnbull, a former member of Wentworth, deposed Mr Abbott as Liberal leader.

New Zealand has a rate of 15 percent, while Britain has an even higher value-added tax of 20 percent.

Treasurer Jim Chalmers ruled out an increase in GST last week, following that call from the Business Council of Australia.

Dr. Chalmers’ Labor hero Paul Keating won the 1993 election campaign against Liberal leader John Hewson’s plan for a 15 percent VAT levy.

Dr. Hewson was also the member of Wentworth, who famously drove a Ferrari.

Despite representing Australia’s wealthiest voters, Ms Spender is also in favor of a 50 per cent capital gains tax credit review for those selling an investment property.

“Capital gains tax needs to be on the table,” she said.

“These are issues that we all face and where we have to say, ‘What are the implications for fairness, but also for productivity and for the economy to run better?’

Australians do not pay capital gains on their primary residence, but since September 1999, investors who sell a rental home are entitled to a 50 percent capital gains tax rebate.

That means if a home increased in value by $100,000 during the time they owned it, only $50,000 would have to be included in their income for that year when they file a tax return.

On pension incomes, Ms Spender hinted she favored Labour’s plan to double the tax rate from 15 to 30 per cent for the 80,000 individuals with more than $3 million in super money.

“If it was something that said a lot more, ‘You’re raising the tax rate on large balances,’ I’d support that,” she said.

“I’m open to reducing super-level concessions for very large balances because we need to move to a system where it’s fairer between generations.”

But she has reservations about the federal government’s plans to tax unrealized capital gains.

“The idea of ​​taxing unrealized capital gains, I think, is frankly bad tax policy,” she said. “It really worries me.”

Ms Spender, the daughter of the late fashion designer Carla Zampatti, said wealthy people in her electorate were worried their children wouldn’t be able to afford a home in a nice part of Sydney.

“I had a lot of older Australians say, ‘I just don’t know how my children will ever be able to afford a house if they live near me,'” she said.

“I’ve had people last week, people with good careers and good assets, say, ‘It’s not in my best interest, but I actually think we should look at these things.’

Ms Spender convened a tax roundtable in April with Ken Henry, former Chancellor of the Exchequer and Chairman of the National Australia Bank.