Grattan Institute Proposes 15% GST Rate for Australia

A new report recommends lifting the GST to 15% and broadening the tax base to fund personal income tax cuts and welfare.

Updated on Oct. 19, 2026 in Taxes

Bold flat-color editorial illustration in navy, cream, and red, showing a circular coin shape and a geometric basket silhouette. — The Grattan Institute recommends raising Australia's Goods and Services Tax to 15%, aiming to shift revenue reliance away from personal income tax. AI Illustration. Upload story photo >

Live Poll

Do you prefer a tax system that relies more on consumption taxes than income taxes?

The Grattan Institute suggests increasing Australia's GST from 10% to 15% to address an over-reliance on income tax revenue. This proposal, detailed in the Budget reboot report, aims to generate an additional $76 billion annually.

Why it matters

Australia's current tax system leans heavily on personal income relative to OECD peers, creating a structural imbalance. Raising consumption taxes could provide the fiscal space for significant income tax relief and increased welfare support.

Australia's 2023 personal income tax revenue accounted for 42.6% of total tax, significantly higher than the 23.7% OECD average. Meanwhile, the current 10% GST rate trails the 19.3% average standard consumption tax rate observed across the OECD in 2024.

The players

Grattan Institute

This is an independent public policy think tank based in Australia that provides evidence-based research on policy challenges.

Josh Frydenberg

He is a former Australian politician who has previously advocated for proposals to increase the GST rate and broaden its base.

The details

The Grattan Institute's plan includes extending the GST to all food items to maximise revenue efficiency. The initiative seeks to shift the tax burden away from workers and towards consumption, mirroring trends in higher-taxing OECD member nations.

The OECD collected revenue statistics throughout 2023.
The OECD monitored consumption tax trends during 2024.
The Grattan Institute released the Budget reboot report on 18 October 2026.
Authors of the Grattan Institute plan published a summary on 19 October 2026.

Market Dynamics

The proposal to include all food in the GST base follows the structural framework established by international consumption tax precedents. This move aligns Australia's tax regime more closely with the broader consumption-based taxation models seen in many OECD economies.

The proposed 15% GST would directly increase the cost of goods and services, affecting household budgets nationwide. Conversely, retail investors and workers could see increased disposable income if the government adopts the corresponding income tax cuts mentioned in the report.

The takeaway

Tax reform remains a complex balancing act between consumption levies and income tax burdens. Readers should monitor future budget discussions to see if the proposed rate changes gain traction in the national legislative agenda.