GST hike cost as much as a carbon tax, with less revenue

A CARBON tax would raise just as much revenue as a 12.5% GST rate, but would not cost everyday Australians as much, the Australian Greens have said.

Greens MP Adam Bandt said on Sunday a Parliamentary Library analysis found that increasing the GST to 12.5% would raise a similar amount of revenue as a $29 per tonne carbon tax.

He said a 12.5% GST hike would cost households nearly three times as much as a carbon tax.

"A question is do you tax pollution or do you tax the things that everyday Australians buy," Mr Bandt said.

"So if a government wants to raise between 10 and 15 billion dollars a year of additional revenue to help fund things like schools and hospitals it's got two choices.

"It can reinstate the original carbon tax and put a price on pollution of about $29 a tonne and have a smaller impact on households and cut pollution, or it can go ahead with raising the GST which will see households paying up to three times as much."

He said it was much fairer to have a carbon tax than raising the GST.

Households would take on part of the cost of a carbon tax but this wouldn't be as much as they would paid under a GST hike, Mr Bandt said.

"All of the GST gets paid by households because it's a tax on everything that you buy almost every day, whereas a price on pollution in large part gets absorbed by the big companies and the big polluters who can afford it most," Mr Bandt said.

Australian Treasurer Scott Morrison said the Federal Government would continue to deal with stakeholders as it prepared to discuss tax reforms.

Shadow Finance Minister Tony Burke said Labor supported emissions trading and that the intention was to reduce pollution, not raise revenue.

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