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# Think tank wants GST on fresh food to fund income tax cuts
- URL: https://www.bushletter.com/grattan-wants-gst-at-15-on-food-to-raise-76bn-a-year/
- Published: 2026-10-19T11:00:00.000Z
- Updated: 2026-10-19T11:00:03.000Z
- Description: Grattan also wants a higher GST rate and increased welfare payments, but Labor says a GST rise is not on its agenda.
- Author: Bushletter Newsroom
- Tags: Markets, Economy, Australia

TLDR

The Grattan Institute wants the GST lifted to 15 per cent and extended to all food, generating about $76 billion a year. Most of the extra revenue would fund income tax cuts and higher welfare payments. The federal government has said a GST increase is not on its agenda.

## What Grattan is proposing

The Grattan Institute says the federal government should raise the GST from 10 per cent to 15 per cent and expand it to cover all food, generating about $76 billion a year in additional revenue.[\[1\]](https://grattan.edu.au/raise-the-gst-to-fund-australias-future/?ref=bushletter.com) The proposal is set out in the institute's report *Budget reboot: How to fund Australia's future*, released on 19 October 2026, and frames GST reform as necessary to address mounting public debt and the cost pressures of an ageing population.

Australia's Goods and Services Tax has sat at 10 per cent since its introduction in July 2000 and currently exempts fresh food, healthcare and education. All Australian general government net debt reached 34.4 per cent of GDP in the 2024-25 financial year, according to the Australian Bureau of Statistics.[\[4\]](https://www.abs.gov.au/statistics/economy/government/government-finance-statistics-annual/latest-release?ref=bushletter.com)

Aruna Sathanapally, CEO of the Grattan Institute, said the scale of the debt problem was historically significant. "Outside of the COVID pandemic, the last time Australian governments owed this much, the country was still paying off debt from a world war," she said.[\[2\]](https://grattan.edu.au/report/budget-reboot-how-to-fund-australias-future/?ref=bushletter.com)

The report recommends allocating about $58 billion of the additional GST revenue to cutting income taxes for low- and middle-income earners and boosting welfare payments for lower-income households.[\[2\]](https://grattan.edu.au/report/budget-reboot-how-to-fund-australias-future/?ref=bushletter.com) Sathanapally said reform on that scale was challenging but that both current and future generations could be better off, with the prize being a more secure future for Australia's finances and for all Australians.[\[2\]](https://grattan.edu.au/report/budget-reboot-how-to-fund-australias-future/?ref=bushletter.com)

## Who wins and who loses

The Grattan report models the distributional impact through two household examples. A low-income single-parent family who rents would pay about $79 in extra GST each week but receive $202 in higher welfare payments and a $27 income-tax cut, leaving them about $150 a week better off overall.[\[2\]](https://grattan.edu.au/report/budget-reboot-how-to-fund-australias-future/?ref=bushletter.com)

A higher-income working family would pay about $262 a week in extra GST and receive a $100 income-tax cut, leaving them paying about $162 a week more in net tax under the package.[\[2\]](https://grattan.edu.au/report/budget-reboot-how-to-fund-australias-future/?ref=bushletter.com)

## The government's response

The federal Labor government has said a GST increase is not on its agenda.[\[3\]](https://aapnews.aap.com.au/news/no-easy-paths-why-calls-grow-for-a-gst-hike?ref=bushletter.com) The report also calls for scrapping the 2018 GST deal that benefits Western Australia, which Prime Minister Anthony Albanese has pledged to keep.[\[3\]](https://aapnews.aap.com.au/news/no-easy-paths-why-calls-grow-for-a-gst-hike?ref=bushletter.com)

KEY TAKEAWAYS

01Grattan's report recommends lifting the GST to 15 per cent and taxing all food, raising about $76 billion a year.

02About $58 billion of that revenue would fund income tax cuts for low- and middle-income earners and higher welfare payments.

03A low-income renting single parent would be about $150 a week better off after offsetting payments under the package.

04A higher-income working family would pay roughly $162 a week more in net tax under the same package.

05The federal Labor government has said a GST increase is not on its agenda.

This article contains analysis and commentary on market conditions. It does not constitute financial, investment, or professional advice. Past performance is not indicative of future results. Always consult a qualified adviser before making financial decisions.

SOURCES & CITATIONS

1. [Raise the GST to fund Australia's future, Grattan Institute](https://grattan.edu.au/raise-the-gst-to-fund-australias-future/?ref=bushletter.com)
2. [Budget reboot: How to fund Australia's future, Grattan Institute](https://grattan.edu.au/report/budget-reboot-how-to-fund-australias-future/?ref=bushletter.com)
3. [No easy paths: why calls grow for a GST hike, AAP](https://aapnews.aap.com.au/news/no-easy-paths-why-calls-grow-for-a-gst-hike?ref=bushletter.com)
4. [Government Finance Statistics, Annual, Australian Bureau of Statistics](https://www.abs.gov.au/statistics/economy/government/government-finance-statistics-annual/latest-release?ref=bushletter.com)

FREQUENTLY ASKED QUESTIONS

What does the Grattan Institute propose for the GST?

The Grattan Institute recommends raising the GST from 10 per cent to 15 per cent and extending it to cover all food, which it estimates would raise about $76 billion a year in additional revenue.

How would the extra GST revenue be used?

About $58 billion of the additional revenue would fund income tax cuts for low- and middle-income earners and higher welfare payments for lower-income households, according to the Grattan Institute's report.

Would low-income households be worse off under the proposal?

The Grattan Institute's modelling suggests a low-income renting single parent would be about $150 a week better off after receiving higher welfare payments and an income tax cut, despite paying more GST.

Has the Albanese government indicated it will act on the proposal?

No. The federal Labor government has said a GST increase is not on its agenda.