Is a $3,300 Rebate Worth a 15% GST?

A closer look at one of Australia’s boldest tax reform ideas.

The federal government is exploring a significant restructure of the GST system — one that could see every Australian adult receive a $3,300 cash rebate.

The goal? To provide direct cost-of-living relief as prices continue to rise across the country. But the proposal comes with a major caveat: the GST rate would increase from 10% to 15%, and the scope of GST would expand to include essential goods and services that are currently exempt.

So What’s Changing?

Under the proposed model:

• Every Australian aged 18 and over would receive a $3,300 one-off rebate

• GST would increase to 15%

• GST would apply to essential goods and services, including:

• Fresh food

• Education

• Childcare

• Healthcare

• Water and sewage

These categories have long been protected from GST to reduce the burden on low- and middle-income households.

Who Benefits & Who Loses?

While a flat rebate may sound equitable on the surface, analysis suggests that lower-income households could end up paying more overall, despite receiving the rebate. The key concer

We are concerned that the proposed $3,300 rebate is not indexed to inflation, meaning its value will diminish over time. While it may provide short-term relief, the broader expansion of the GST would increase the cost of essential goods and services, placing a disproportionate burden on low-income households. In effect, this could lead to a permanent rise in living costs for many Australians.

From a small business perspective, the GST registration threshold remains unchanged at $75,000—despite being set in 2007. When adjusted for inflation, this figure would now exceed $125,000. This outdated threshold creates an uneven playing field, discouraging growth and placing smaller operators at a disadvantage. We believe this highlights the need for a comprehensive review of GST policy. You might be asking: is this meaningful reform or a rebadged cost shift?

The government says the GST system needs an overhaul and many agree. But the question remains: Is a $3,300 rebate worth a permanent increase in the cost of essential goods and services?

It’s a fundamental shift in how Australians are taxed — and how everyday expenses are treated by the system. While some economists and MPs support the idea, others argue it may deepen inequality and further erode the middle class.