Higher GST, lower income tax? The major shake-up urged to lift Australia’s economy
Sydney Morning Herald
by Shane WrightFebruary 15, 2026
AI-Generated Deep Dive Summary
The International Monetary Fund (IMF) has called for significant tax reforms in Australia to boost economic growth and productivity. The IMF's recommendations include increasing the Goods and Services Tax (GST), overhauling the capital gains tax, and reducing company tax rates. These changes aim to enhance economic efficiency and equity while addressing structural impediments to growth.
The proposed reforms also suggest ending certain GST exemptions, such as those for fresh food and education, and phasing out tax breaks like superannuation concessions and capital gains tax discounts. While experts support these measures to correct market distortions, there is resistance from some quarters, particularly regarding the impact on housing markets and first-time buyers.
Additionally, the IMF highlights the growing risk of state and territory spending on infrastructure projects, warning that unchecked growth could lead to inefficiencies and higher borrowing costs for the federal government. They recommend reviewing tax and spending policies to ensure better alignment between federal and state priorities.
The proposed reforms aim to stimulate economic activity by reducing bureaucratic hurdles and fostering a more competitive business environment. However, critics argue that these changes could negatively affect housing supply and affordability, particularly if capital gains tax concessions are curtailed.
These recommendations underscore the IMF's concern about Australia's long-term economic sustainability and its call for comprehensive structural adjustments to maintain growth without inflationary pressures. The outcome of these reforms could have significant implications not only for Australia but also for global economic stability.
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Originally published on Sydney Morning Herald on 2/15/2026