Policy Brief: The Goods and Services Tax

The Australian Goods and Services Tax (GST) is a tax levied on the supply of goods and services in Australia. The GST is charged at a rate of 10 per cent of the final price of goods and services. In the fiscal year ended 30 June 2014, the GST raised $51.4 billion. This is about 3.3 per cent of GDP or 12.5 per cent of total tax revenue collected in Australia. The following chart shows the relative importance of the GST in Australia's tax mix. The GST began operating in Australia in 2000, and it has changed little in the last 15 years. The GST was introduced under the Howard-Costello government. However, as explained by Richard Eccleston, it was a "thirty year battle" for the GST to be enacted in Australia.The GST is levied under the A New Tax System(Goods and Services Tax) Act 1999 and related legislation.The GST is a type of indirect tax levied on suppliers of goods and services in Australia, called an invoice-credit value added tax. The tax at 10 per cent is levied at the point of sale of a good or service at all points of sale through the supply chain. Each supplier must pay GST to the ATO and receives a tax credit for any GST paid on inputs, on evidence of a tax invoice. As a result, each supplier pays the net GST only on the amount of value added by that supplier. Ultimately, the GST is borne by the consumer.This report was commisioned by Crawford School of Public Policy, Tax and Transfer Policy Institut