New Budget Could See Higher Solar Taxes so Citizens Don’t Leave Expensive Grid

The federal government is considering a major increase in General Sales Tax (GST) on solar panels in the upcoming Budget 2026-27.

The GST on solar panels may be raised from 10 percent to 18 percent. This will increase the cost of imported solar equipment, making it difficult to exit high grid electricity bills and load-shedding

The proposed tax hike is being viewed as a big favor for Independent Power Producers (IPPs) and the national grid as higher solar installation costs could slow the migration of households and businesses away from grid electricity.

Topline Securities said the measure may help stabilize electricity demand on the national grid, which has faced declining consumption since urban consumers increasingly shifted toward solar.

Alongside the proposed solar tax increase, the government is also expected to continue its industrial surplus electricity package to offer excess power at concessional rates for industries.

The policy aims to encourage factories and large industrial consumers to rely more heavily on the national grid by offering cheaper electricity tariffs. This package could support industrial activity while also helping absorb surplus generation capacity.

The federal government aims to improve grid utilization and support the financially stressed power sector. Private citizens and the salaried class will likely be forced to face the full force of the tax hike starting July.