Don't lift taxes to fix the budget

But a GST increase would still be damaging. It would exacerbate the inequity that occurs when some avoid GST through cash-in-hand transactions and small purchases from overseas. And it would discourage backyard businesses from growing to the point where they need to collect GST.

Rather than look to increase tax, we need to recognise that current Budget difficulties are driven by excessive spending.

After accounting for inflation, Commonwealth Government spending per person has increased by more than a third since the introduction of the GST. It is currently more than a quarter of GDP and well above the post‑GST average.

Growth in Commonwealth spending over the last decade has been fastest in the areas of health, schools and universities, housing, environmental protection, road and rail transport, and support for the arts and sport. Cuts need to be made in all these areas. And since public sector wages have grown faster than private sector wages over this period, a sustained period of public sector wage restraint is also in order.

A substantial improvement in the Budget position is required to sustain everyday Australians in the years and decades to come. This improvement needs to come through lower government spending, not higher taxes.

David Leyonhjelm is Liberal Democrats Senator for NSW