Call to raise GST, cut company tax

The Federal Government has been urged to boost the economy by lifting the GST, broadening its reach and cutting the company tax rate.

In a challenging policy blueprint, the OECD used the release of its annual Going for Growth report to urge the Government to come up with plans for more affordable child care.

The Government has already delayed the release of its tax White Paper and is facing discontent from business over its position on a 1.5 per cent levy for its dumped paid parental leave policy.

This year's Budget deficit has blown out by more then $10 billion, and next year's deficit has been revised up to a forecast $31.2 billion.

The OECD said Australia's GST rate, at 10 per cent, was low by world standards and was limited in scope. A country as dependent as Australia on capital from other parts of the world should have a lower company tax rate. The corporate tax rate, at 30 per cent, is about five percentage points higher than the OECD average.

Prime Minister Tony Abbott is pledging a families package in the run-up to the Budget in May.

According to the OECD, Australia ranks low on pre-primary education rates and "children from disadvantage backgrounds face severe educational and skills shortfalls".

More investment in these areas would deliver major economic benefits to the country.