Australia's poorest would end up paying the most if the GST was hiked to 15 per cent even with a five per cent income tax cut, new data shows.
Data commissioned by Australia's peak social services body shows two thirds of households on incomes up to $100,000 would be worse off if the consumption tax was raised.
Low-income earners would lose about $33 a week because whatever they save from a tax cut would be offset by having to pay more at cash registers.
The wealthier would gain an extra $69 each week because poorer households often spend more earnings meeting the cost of living, while higher earners have more savings.
The modelling by the National Centre for Social and Economic Modelling (NATSEM) shows a 15 per cent GST, keeping all existing exemptions for fresh food and other areas, would mean:
* The lowest 20 per cent of earners would pay seven per cent more of their income.
* Middle-range earners 4.2 per cent more.
* Top earners three per cent more.
The Australian Council Of Social Services (ACOSS) is using the data to prove raising the GST to fund income tax cuts would further drive inequality.
"Fairness and simplicity would be undermined and it would do little or nothing to improve economic efficiency," ACOSS chief Cassandra Goldie said in a statement.
ACOSS says it does not rule out a GST hike, but the focus at the start of the tax debate should be on stamp duties and business taxes.
OTHER REPORT HIGHLIGHTS:
* Leaving the GST at 10 per cent but including fresh food would have less of an impact than a 15 per cent rate. That would raise $7 billion in 2016, but increase living costs by 0.7 per cent. The poorest would have their spending power reduced by two per cent, middle incomers by one per cent and top 20 per cent by 0.6 per cent.
* Raising the GST to 15 per cent without removing exemptions would raise $29 billion in 2016, and increase the cost of living by 2.8 per cent.
* If revenue is used to fund tax cuts, the top 40 per cent of earners would gain at the expense of the bottom 60 per cent. The lowest 20 per cent of households by income to lose $33 a week (6.6 per cent of their income), while top 20 per cent to gain $69 a week (2.1 per cent of income).
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