Coronavirus taxes: How to repay our virus debt
A GST increase, coronavirus levy and other big tax changes are likely to be examined by governments when Australia switches its focus to paying back hundreds of billions of dollars of extra debt.
More than $200 billion of stimulus packages were announced in March, and billions more dollars will evaporate through lower tax receipts from an economy in recession.
Repaying it will be a huge challenge.
Some academics and analysts want an increase to the GST, which at 10 per cent is much lower than many countries. Others want tax breaks for retirees scrapped to help repay the debt rather than leave it for younger generations of workers to struggle with.
AMP Capital chief economist Shane Oliver said collecting extra revenue - rather than spending cuts - was the most likely way governments would pay back the debt.
"I think the most logical way to approach it would be a coronavirus levy," he said.
"People begrudgingly accept them because they can see a need. I think most Australians who still have a decent job would be happy to contribute to this."
Australians had previously paid temporary gun levies, flood levies and Budget repair levies, Dr Oliver said.
"An alternative is to postpone or cancel the upcoming tax cuts but I'm not sure that's the best," he said.
Dr Oliver said raising the GST was often put in the too-hard basket and he expected it to stay there, despite there being good economic reasons to increase the GST, reduce direct taxes and compensate pensioners for extra costs.
KPMG Australia chief economist Brendan Rynne said it was difficult to know what future financial measures might be needed.
"A real challenge at the moment is we are still in the storm," he said.
"Every Australian will have gained a benefit from the policy approaches adopted by the Commonwealth and State Governments.
"Therefore it is right and responsible that every Australian helps pay it back."
Dr Rynne said the right balance to repay debt might involve business and personal income taxes, consumption taxes such as the GST, indirect taxes and excises.
"The likelihood is a whole suite of tax measures are going to be looked at … to pay this extraordinary expenditure back over a reasonable period of time," he said.
"That reasonable period of time is going to be decades.
"The challenge is to remind everyone that everyone has benefited here so everyone should pay."
CommSec chief economist Craig James said people should focus on economic growth and responsible government spending rather than taxes.
"I think if we spend too much time thinking about paying the debt we will never get into the recovery," he said.
"Everyone will be spooked by the higher taxes. The most important thing is for the economy to get back onto its feet."
Mr James said while virus containment measures were working, we still required treatments or a vaccine.
"We can recover here in Australia but we still have to wait for the rest of the world," he said.
Mr James said repairing the economy would require the same bipartisan approach that had been successful in meeting Australia's health challenges.