How to fund the fiscal response to a global pandemic and avoid an economic catastrophe
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The Commonwealth Parliament recently legislated ~$200 billion of Coronavirus (COVID-19) stimulus expenditure for the period 2019-20 to 2021-22. This will increase Australia’s annual net debt to an estimated $600 billion over the next few years.
This paper outlines possible revenue raising and taxation measures the current and future Australian governments may employ to finance the Coronavirus (COVID-19) stimulus expenditure. Namely:
the sale of public trading enterprises
increasing indirect taxes (goods and services tax (GST) and excise/customs duties), and
removing taxation benchmark variations.
Irrespective of whatever policy measures are implemented, three things are of central importance to policy makers, governments and the Australian public when deciding on the chosen policy responses to fund the Coronavirus (COVID-19) stimulus expenditure and avoid an economic catastrophe:
the available revenue gained from undertaking a chosen approach
opportunity costs associated with all options as, “there is no such thing as a free lunch,” and
equity impacts associated with who will bear the brunt to fund the revenue raised and opportunity costs.