Counting the cost of lifting GST: $4 billion A SMALL rise in the GST from 10 per cent to 12.5 per cent would cost NSW consumers $4 billion - about $570 each - a year in tax. Economists claimed struggling families could be compensated with income tax cuts while protecting the government's revenue base. The estimated cost of living increase incurred by increasing the consumption tax would be about the same as the carbon tax. But, as with the government's carbon tax, experts claimed families and pensioners would have to be partially compensated by bringing down income taxes in addition to cutting state taxes such as payroll tax and land tax. Three states - NSW, Victoria and West Australia - have all supported the need for a review of the GST following Tony Abbott's announcement of a tax review if he wins government. Mr Abbott has said all states would have to agree before any change could be made. He also said he had no plans to change any taxes in a first-term Coalition government. As Labor continued its fear campaign over the GST, claiming a federal Labor government wouldn't touch the consumption tax, economic experts claimed the GST needed to be raised to fix the government's revenue problems. But income taxes could be adjusted to protect pensioners and lower income earners. The Daily Telegraph has calculated a 2.5 basis point rise in the tax would add another $4 billion in revenue on top of the $16 billion already collected. That does not take into account broadening the tax to include things currently exempt such as food, education and financial services. The National Centre for Social and Economic Modelling at Canberra University confirmed the figures for a small rise in GST on NSW residents would be about another $4 billion in taxes paid, and returned to the states. The centre's principal research fellow Ben Phillips said, when the GST was first introduced by John Howard, it was accompanied with tax cuts, increased family benefits and extra payments to pensioners. Mr Phillips supported the GST being included in the Coalition's tax review, and said it should be increased to buffer against the falling revenues facing the government, which Treasurer Wayne Swan has blamed for the $19 billion budget deficit this year. "GST is one of those sources that is more stable ... it can be designed in a way that can mop up those people who would be disadvantaged," he said. Both ... will have to bite the bullet sometime.