GST takes about 7.3% of spending whatever Australian households spend, e61-UNSW says
Researchers at the e61-UNSW partnership found Australian households pay about 7.3% of their spending in GST at any spending level. Against one year's income the tax still looks regressive, so the yardstick matters to the debate over raising or broadening it.
The Scientist · Science desk
On single-year income, GST equals 7.2% of income at the 10th percentile and 4.1% at the 90th. With income averaged over several years, it is 6.5% at the 10th percentile and 4.2% at the 90th.
| Figure | Value | Note | Claim |
|---|---|---|---|
| 10th percentile, single-year income | 7.2% of income | 4 | |
| 90th percentile, single-year | 4.1% of income | 4 | |
| 10th percentile, multi-year avg | 6.5% of income | 5 | |
| 90th percentile, multi-year avg | 4.2% of income | 5 |
What happened
- The team used 2015-16 data from the HILDA Survey, then added further survey years to follow households' income and spending over a longer period.
- Averaging income over several years moved those figures to 6.5% at the 10th percentile and 4.2% at the 90th.
- The longer-term measures were meant to account for temporary income changes such as unemployment, study or parental leave.
Why it matters
- decision Anyone calling the GST regressive or proportional now has to say which denominator they mean, because single-year income, multi-year income and spending give different answers for the same households.
- constraint Reform arguments that start from single-year income are working from the widest of the gaps the study reports, and e61 says year-to-year swings make that gap look larger.
- exposure The claim that GST is flat is exposed too: it holds for spending, while a gap remains between lower- and higher-income groups on multi-year income.
The study is a descriptive analysis of survey data [3]. There is no treatment and no control; the only thing that changes from one result to the next is the denominator.
Against one year of income, lower-income households carry a heavier GST load, and the gap between the 10th and 90th percentiles is 3.1 percentage points [12]. Against spending, the same tax is close to flat at about 7.3% [1][2]. The reason is timing. "Someone between jobs or taking time out to study will usually maintain their spending by drawing on savings or borrowing, so the GST they pay looks large next to that year's income," said Matt Nolan, research manager at e61 and a co-author of the research [8]. Nolan said of the mirror case: "Meanwhile, someone having a bumper year tends to save the extra, so their GST looks small." [9]
Averaging income over several years should narrow the gap if that account is right, and it does. The 10th-to-90th gap falls to 2.3 percentage points [13], about 26% smaller than in the single-year comparison [14].
It does not close. On multi-year income the 10th-percentile group still pays about 1.5 times the income share that the 90th-percentile group pays, against about 1.8 times on a single year [16][15]. We think multi-year income is the fairest test of the regressivity claim, because it removes the year-to-year noise Nolan describes and still leaves a gap. Richard Holden, a Scientia professor and chief societal economist at UNSW Sydney and a senior academic fellow at e61, makes the case for the wider lens: "Looking at spending and longer-term income provides a more complete picture of how the GST affects households." [7]
The thing this doesn't tell you is what happens to that 7.3% if the rate rises or the base widens. The researchers worked from 2015-16 survey data [3], and a flat share of today's spending cannot show who buys the goods a wider base would add. The findings are relevant to the ongoing debate over whether Australia should increase the GST rate or broaden the goods and services it applies to [6].
What to watch
- Whether e61 or others publish modelling of a higher GST rate or a broader base using the same three measures.
- Whether the spending-share result holds when the analysis is repeated on HILDA waves later than 2015-16.
- Whether the Australian debate over raising or broadening the GST starts to state which yardstick its distributional claims use.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence58
- Adoption
- Insufficient
- Hype gap+10
- Incentives
- Insufficient
- Confidence55
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
The e61-UNSW Policy Research Partnership found households pay around 7.3% of their total spending in GST, regardless of how much they spend.
- [2]
The research found GST looks regressive when compared with income, but broadly proportional when compared with spending.
- [3]
The research used 2015-16 data from the HILDA Survey to compare GST payments with household income and spending, and used data from multiple HILDA survey years to examine income and spending over a longer period.
- [4]
On single-year income, households at the 10th percentile pay GST equivalent to 7.2% of their income, compared with 4.1% for households at the 90th percentile.
- [5]
When income is averaged over several years, GST accounts for 6.5% of income at the 10th percentile and 4.2% at the 90th percentile.
- [6]
The findings are relevant to the ongoing debate about whether Australia should increase the GST rate or broaden the range of goods and services to which it applies.
- [7]
Richard Holden, Scientia professor, vice-chancellor's professor and chief societal economist at UNSW Sydney and senior academic fellow at the e61 Institute, said: "Looking at spending and longer-term income provides a more complete picture of how the GST affects households."
- [8]
Matt Nolan, research manager at e61 and co-author of the research, said: "Someone between jobs or taking time out to study will usually maintain their spending by drawing on savings or borrowing, so the GST they pay looks large next to that year's income."
- [9]
Nolan said: "Meanwhile, someone having a bumper year tends to save the extra, so their GST looks small."
- [10]
Using longer-term measures helped account for temporary changes in income, such as unemployment, study or parental leave, and for the different ways people save and spend through their lives.
- [11]
Nolan said life-cycle fluctuations make the GST appear more regressive in a given year.
- [12]
On single-year income the 10th-to-90th percentile gap in GST share of income is 3.1 percentage points.
- [13]
On multi-year income the 10th-to-90th percentile gap in GST share of income is 2.3 percentage points.
- [14]
The multi-year gap is about 26% smaller than the single-year gap.
- [15]
On single-year income the 10th-percentile group pays about 1.8 times the income share of the 90th-percentile group.
- [16]
On multi-year income the 10th-percentile group pays about 1.5 times the income share of the 90th-percentile group.
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Sources
1 independent publisher whose own reporting we read for this story.
- phys.orgNew research challenges the idea that GST always hits lower-income households hardest
1 article · October 15, 2026
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