iscoverAs NSW battles to raise more money for its arts sector through tax reform, The Australia Institute has proposed raising the state’s GST revenue.
‘Now is the time to support the arts’: GST reform to bolster NSW arts sector
23 September 2025
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9 minute read
The Australia Institute has revealed $76 million could be injected into NSW’s arts community by raising GST revenue in the state to match economic growth since 2001.
According to the Institute, by raising the GST revenue to match economic growth, the additional $76 million would be enough to fund another 10 rounds of Create NSW arts and cultural grants, triple support for local music, or run 211 NSW Premier’s Literary Awards.
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In a submission to the NSW government, the Institute highlighted the critical need to fix GST as it could create a significant stream of additional funding for the grappling arts sector.
The submission said of what little tax revenue was raised in the country, Australian governments spent relatively little on cultural services.
“State governments are responsible for a significant portion of arts funding, yet they are largely reliant on Federal Government revenue. It is important for state governments and arts advocates to realise that the Australian government raises very little tax revenue by international standards,” the Institute said.
“Australia is a low-tax country. Only eight out of 38 developed countries collect less tax than Australia and the eight includes relatively low- income countries such as Türkiye and Mexico, as well as tax havens including Switzerland and Ireland.”
“This is a key reason why NSW and other state governments struggle to fund the services, including cultural services, that communities want.”
The Institute said GST had not grown in line with the wider Australian economy, and if it had grown at the same rate as the overall economy then the states would have received an additional $22 billion in 2023-24.
Over time, this would have created the $76 million, “which would have been spent on arts and culture in NSW”.
“Even this level of revenue increase could be transformational for arts in NSW. Increasing revenue and increasing funding for the state’s existing programs and institutions should be the priority of tax reform and arts funding.”
However, despite its suggestion to reform GST, the Institute said any attempt to simply increase the GST rate above 10 per cent would exacerbate the inequality already caused by the exclusion of so many goods and services preferred by the highest income households.
“A simple solution to the impact of rising inequality of the decline in GST growth would be for the Commonwealth to collect new taxes to add to the pool of revenue the Commonwealth provides to the states,” the Institute said.
“This could include new taxes on wealth, or a simple royalty on gas exports from Commonwealth waters that are currently given away royalty-free.”
Suggestions such as this have been widely debated, with a mixture of opinions both for and against. However, the submission said the Institute’s proposals were not “radical” and the NSW government and arts advocates should use their “considerable influence”.
The Institute linked the main motivator to its submission and urge for GST reform to the decline in the arts industry presenting a significant threat to the Australian economy.
This was attributed to the fact the arts sector could not be moved offshore as the economy and technology changed, therefore a key factor in ensuring a strong Australian cultural sector was adequate government support.
The arts sector was notoriously underfunded as Australia was noted by the Institute to collect a low level of tax revenue relative to the size of the economy, and the nation struggled to fund the level and quality of services that Australians were increasingly demanding.
Based on numbers and figures provided by the submission, it was highlighted that the OECD estimated that in 2019 Australian national and sub-national government spending on cultural services was among the lowest in the OECD, despite Australia having some of the most public support for cultural services.
In addition to the reform of GST, it was suggested that tax-free arts prizes and tax-free grants be considered to help provide a critical boost to the sector.
“There are clear solutions to Australia’s arts woes. The options for both direct and taxation-based support discussed in this submission could revitalise the arts if adopted by Australian governments.”
“Support would provide a lifeline to a struggling but crucial sector and allow more Australians to enjoy arts and cultural activities.”
“The rising cost of living and lack of funded platforms for the creative industries to flourish, coupled with limited intervention and strategic investment would likely lead to further, perhaps even irreversible, decline for the arts in Australia.”
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