GST is the left's version of climate denialism

Here's an opinion that's unlikely to win me any friends: GST increases are the left's version of climate denialism.

Just as there is wide consensus among climate scientists about the anthropogenic origins of global warming and the urgent need to do something, there is wide consensus among economists that GST is an exemplary tax. There is even wider consensus among Australian economists that our GST rate needs to go up because we are woefully over-reliant on direct taxation (namely income and corporate taxation) and substantially out of step with global best practice in this regard. Finally, there is pretty much unanimous agreement among Australian taxation specialists that GST must go up as part of any sensible, broad reform of the tax-and-transfer system (which is what we need, contrary to the coalition's tendency to focus solely on corporate tax rate cuts and Labor's tendency to focus solely on GST).

Yet just about every non-economists left-leaning Australian I have ever met thinks GST hikes are a bad idea because "it's regressive!". (I realise that my acquaintances are a bad sample because support for the GST appears to be rising in polls). This opinion is shared regardless of wealth or education, much like climate denialism on the right. It is an almost entirely tribal argument grounded in a knee-jerk moral reaction rather than any sort of technical explanation.

I'm not going to attempt a full blown technical defence of GST, but there are a few points I want to make.

1) GST is not regressive in the context of a tax and transfer system if it is used to fund transfers, which it overwhelmingly is in Australia because the revenues are earmarked for state spending on health, education and infrastructure

2) Tax settings should focus on efficiency. Equity can be promoted through the transfer system. Use the right tools for the job. GST is one of the most efficient taxes, far more efficient than income and corporate tax, especially when the marginal investor in Australia is a foreign firm.

3) "It's regressive!" is exactly the argument economists use against free higher education, but I don't see any complaints from the left there!

4) "It's regressive!" reminds me of the kind of moralising with no technical basis arguments used by libertarians in America to reject single-payer healthcare even though it is more efficient and more equitable than a market approach. Tax and transfer policy is more complicated than picking income tax over GST simply because one is regressive and the other isn't.

While I'm here, can I also mention that the debate around the tampon tax is oh so fucking lame. The tampon tax refers to the fact that tampons are taxed while condoms aren't. This is a fallacious argument. Tampons and condoms are not commensurate goods. Tampons are a necessity - this is precisely why it is arguably sensible to apply the GST to them. The tax does not distort behaviour, so it generates revenue efficiently. It is ridiculous to claim this is "taxing periods" specifically, because the GST applies to everything.

Condoms on the other hand are goods used voluntarily with large positive externalities - benefits to individuals not involved in the transaction - and public health benefits. Specifically, limiting the spread of SDTs and unplanned pregnancies. Because condom use is elastic, meaning that its consumption is responsive to price in a way that tampons, which are a necessity, are not, it is sensible to subsidise condom use, which is basically what making them tax-exempt does. Now I've been convinced that subsidising tampons is also a good idea, but then let's say that rather than further undermining the nation's already poor understanding of GST.