Increase GST, expert urges


A VISITING tax expert has urged Australia to increase the goods and services tax and slash other taxes to make life simpler for businesses and householders.

Chas Roy-Chowdhury, head of taxation for the British-based Association of Chartered Certified Accountants, said that at 10 per cent, Australia's GST rate was low by world standards.

European experience showed it could be increased to 20 per cent without adverse effects, encountering public resistance only when it moved towards 25 per cent.

He also said Australia's high headline rates of personal and company tax disadvantaged the country internationally, making it appear to be a high-tax country when it was not.

''If I was a multinational looking to invest, the high rates before deductions, offsets and exemptions might put me off,'' Mr Roy-Chowdhury said. He backed the Henry review's plan to eliminate most exemptions and ensure all types of income were taxed, which would make the headline rates lower at no cost to revenue, and Australia more attractive for investors.

''It also would be good for Australians,'' Mr Roy-Chowdhury told The Age. ''If you can see what you are paying, you buy in to the system; tax doesn't become a separate dark art you leave to other people.''

While increasing the GST might not sound popular, he said that if it was packaged with lower personal tax rates most people might find themselves better off.

The Henry review recommends that fringe benefits and employers' super contributions be taxed as income in the hands of recipients and that the fringe benefits tax exemption now enjoyed by charities be phased out.

It has published an indicative tax scale with only two rates for most people: zero for the first $25,000 and 35 per cent for everything thereafter, up to $180,000.

''That sort of simplicity is worth paying for,'' said Mr Roy-Chowdhury. ''I would advocate smoothing the way by sending anyone adversely affected a cheque in the post.''

Asked if he was suggesting bribing losers to accept the new system, he said transitional rebates had an honourable history overseas and were worth the expense.

He welcomed the Henry review's aim of making the system so simple that tax returns were not needed, but warned Australia not to go as far as Britain had done and make returns optional.

''In introducing a new computer system, the UK authorities have just discovered they have been collecting the wrong amounts of money,'' he said. ''People have been switching jobs so often it has overwhelmed the system.''

Increase the GST.  No thanks, someone should tell Mr Chas Roy-Chowdhury to jump in the lake.  How would it work?, yes that's right a nice big tax cut to the already well off, and a few peanut's to the low income workers.  Just like Mr Howards never ever GST.  

The fact that Labor never used a doubling of the GST by the libs as a scare tactic to use in the election, made me believe that both parties had this in their planning for our tax system.

I hate GST, and the whole removing other taxes theory is just bollocks, because they don't do it, we just end up paying more.

Firstly the ACCA is for dummies.

You do that qualification if you can't handle ICAEW (mine) or CIMA. Their exams are easier so I always take what their experts say with a pinch of salt.


In saying that, I do believe Australia's sales tax is far too low.
Australia has things ass-backwards. A high direct tax and low indirect tax.

I would like to see GST raise to 15-17% and a reshuffling of the tax bands on income tax to prevent brackcreep.

I'd also cap the top rate of tax at 40% so we can attract higher income earners to the country.

It does work. Mrs Thatcher did this in 1980 to great effect.

I rather liked the GST, it cut sales tax on items from 40% to 10%, sure we have to pay tax on services and food now, but I’m not a fatty who required large amounts of food. and I’m quite skilled with my hands so I never require services. But if they wanted to increase GST to say 15% I wouldn’t mind so much as long as they end income tax. It would be a fair system for all as the more you spend the more your taxed.

It was supposed to get rid of a whole bunch of minor taxes, that were effectively another form of godd or service tax. That would be a good thing.

It would also make sense to increase the GST and reduce income tax until a lot of people on lower incomes pay no tax at all. Wouldn't it be great if a lot of people didn't have to fill out any kind of tax return?


Quote:

I hate GST, and the whole removing other taxes theory is just bollocks, because they don't do it, we just end up paying more.

Isn't that ultimately up to you, the voter? They only got away with keeping the other taxes because voters let them. This is not a rational argument about shifting the tax base. Doing something incorrectly is not a sound argument against doing it properly.

"because they don't do it,"

All of the taxes and imposts negotiated by Howard and Costello with the states were removed. None were not removed.

None.

Please delete wrote on Sep 10^th, 2010 at 10:36am:

"because they don't do it," All of the taxes and imposts negotiated by Howard and Costello with the states were removed. None were not removed. None.

Increasing the GST is a very intelligent move.

If you go through the list of things that you actually pay GST on there is not a lot reducing personal tax would be a great assistance to low income earners it's not hard to do a list of what you pay GST on.

LIST

PETROL
GAS
ELEC
Electrrical goods
clothes
toys
services
new cars
etc etc

So let me get this clear - the right wingers on this thread advocate lifting the price on just about everything, the proceeds of which are to go to the states?

Please delete wrote on Sep 10^th, 2010 at 11:28am:

So let me get this clear - the right wingers on this thread advocate lifting the price on just about everything, the proceeds of which are to go to the states?

And your point is  

Please delete wrote on Sep 10^th, 2010 at 11:28am:

... the proceeds of which are to go to the states?

Good point. The GST is good enough or bad enough, depending on opinion, as it is. Additional tax on non-essentials (not to go to the states) might be worth considering.

How you raise revenue, and how you spend it are different issues.

"And your point is "

Just trying to be sure you've thought this through.

And yes, the states patently need more money.

Since the GST came in, for whatever reason, no state seems to be able to provide the basics.

freediver wrote on Sep 10^th, 2010 at 11:42am:

How you raise revenue, and how you spend it are different issues.

, How it is spent we don't have a lot of control over and there is no reason why it cannot go to the federal government to be used for infrastructure

You have just as much control over how it is spent as you do over how it is raised. So how it gets spent is not a rational basis on which to decide how to raise it.

freediver wrote on Sep 10^th, 2010 at 11:47am:

You have just as much control over how it is spent as you do over how it is raised. So how it gets spent is not a rational basis on which to decide how to raise it.

The fear of those three words is amazing Goods And Services

. I know what it's like to live on a fixed income it doesn't frighten me

"You have just as much control over how it is spent"

Not in the case of the GST, which is somewhat protected by agreements made in its' implementation. Nothing that can't be bypassed by the Parliament, but that would not be without possible PR problems.

While Im advocating levies how about we have Global economic crises levy to put to infrastructure, training and debt reduction.
I dunno..say 5% on the GST for say...2 yrs?
It will take pressure off interest rates as well as mean we come out the other end of the crises debt free and ready for the future  :)

Please delete wrote on Sep 10^th, 2010 at 11:52am:

"You have just as much control over how it is spent" Not in the case of the GST, which is somewhat protected by agreements made in its' implementation. Nothing that can't be bypassed by the Parliament, but that would not be without possible PR problems.

But the same is true of all tax and spend issues. You need to go through the politicians. So the point still stands.

The deal with the states is not a limit placed on control by the voting public over the spending. Rather, it is an expression of that control. The federal politicians who implimented the GST did not want to cede control over it to the states. Rather, the public did.

In the last 4 weeks the Govt. made 4 x more money from the GST
than I was paid for the work I did.

If I lost my job I'd have to beg for a lousy $230 a week from Centerlink.
What a ripoff.

Quote:

In the last 4 weeks the Govt. made 4 x more money from the GST than I was paid for the work I did.

Are you trying to say you made some big purchases?

Bobby. wrote on Sep 10^th, 2010 at 2:14pm:

In the last 4 weeks the Govt. made 4 x more money from the GST than I was paid for the work I did. If I lost my job I'd have to beg for a lousy $230 a week from Centerlink. What a ripoff.

You either got paid very little (your fault) or you bought some very expensive items(also your fault).  So whats the problem?

increasing the GST to 15% could be sold quite effectively as a revenue neutral device - now. but the value of a GST is that its broad affects remain while cahnges to other taxes have to be constantly updated to reflected changed conditions. IMagine that if in return for a 15% GST we received:

1) Lower income taxes that were mainly tailored to the lower income earners since GST affects most people relatively the same amounts
2) a staged removal of the Petrol excise over 3 years which would actually make petrol cheaper.
3) a removal of a whole swag of other insidious taxes like land tax and stamp duty on home purchases.
4) a small reduction in the company tax rate
5) lower superannuation taxes

We'd all be better off and initially it would merely shift the tax burden around but in the longer term it would ensure we dont have to continually tweak the system

Quote:

a staged removal of the Petrol excise over 3 years which would actually make petrol cheaper

You should ask the taxation experts what they think of that one.

Abbott said... vote liberal to stop the taxes, so given so many of you voted ALP, I can only assume you wanted them?

So don't complain.

8-)

Mellie, when you have a limited number of choices to cover any number of policy issues, you cannot expect someone to support every policy a party has, even if it is their first preference.

That is the nature of representative democracy.

freediver wrote on Sep 10^th, 2010 at 10:54pm:

Mellie, when you have a limited number of choices to cover any number of policy issues, you cannot expect someone to support every policy a party has, even if it is their first preference. That is the nature of representative democracy.

I think it's called budgeting within ones means, this opposed to bribing every "BOB" Dick and Harry, to win an election you didn't deserve to win to begin with.

Someone has to foot the bill, and guess who that will be?

US!!!


They promise the world yet give us an atlas....honestly, who did you expect would pay for it?

The flipping tooth fairy?

Wake up, and stop trying to rationalise with what's already myth-busted before it's even got off the ground.  It just makes you look even more sillier than you are. Either that, or you seriously need a wake up call.

You had better be younger and more ignorant than me Mr, or else I will never find it within myself to justify your apparent naivety.




Really.

Bottom line, many of you fell for the stranger baring gifts...Tony Abbott was too conservative and realistic...pity, because you wont get what you bargained for at the polls, not at all.

::) Learn!

The more they offer, the more you need to concern.

longweekend58 wrote on Sep 10^th, 2010 at 5:12pm:

Bobby. wrote on Sep 10th, 2010 at 2:14pm: In the last 4 weeks the Govt. made 4 x more money from the GST than I was paid for the work I did. If I lost my job I'd have to beg for a lousy $230 a week from Centerlink. What a ripoff. You either got paid very little (your fault) or you bought some very expensive items(also your fault).  So whats the problem?

I just completed the work required to put out a job worth $170,000.
The Govt gets $17,000 in GST.
It's not my fault that I don't get paid $17,000 for 3 to 4 weeks work.
The Govt. makes more than me sometimes.

Increasing the GST when the cost of food, utilities etc are already skyrocketing would truly be the final nail in the coffin for the 'working poor', the under-employed, and those on welfare.

Kat wrote on Sep 11^th, 2010 at 5:58am:

Increasing the GST when the cost of food, utilities etc are already skyrocketing would truly be the final nail in the coffin for the 'working poor', the under-employed, and those on welfare.

Ummm, there's no GST on basic foodstuffs. That said, I'd like to see a review of the tax.

To my mind, taxing any of the necessities of life is anathema. Most food, clothing and housing (to name a few) should be tax-free. There have to be limits, of course. Beyond limits, even necessities can become luxuries. The simplistic 10% on everything is easy to administer, but it's a blunt tool.

Properly managed, consumption taxes can succeed in taxing those who can afford to pay, while sparing those who cannot. In general, income taxation succeeds only with wage earners - the rich can afford accountants to evade that tax.

An acquaintance once commented to me "If your accountant can't make your business show a loss, you need another accountant". having worked in the taxation field for several years, I can attest that the number of businesses that showed losses year after year, yet remained in business, was truly miraculous.

Quote:

To my mind, taxing any of the necessities of life is anathema.

To an economist, the opposite is true.

One of the goals of taxation is to minimise the change to the economy caused by the tax. This is the reason for broad taxes like the GST and for income tax. It is also a major reason for alcohol and cigarrette taxes - not just that they are bad, but because you can put a high tax on it without destroying the industry. Luxuries are the opposite. They do actually compete with each other. So if you tax yaughts the rich will go on an overseas holiday instead, and the yaghtmakers go out of business. No skin off the nose of the rich, but someone loses their job.

For this reason food, tampons, medicine etc should have GST on them.

There are plenty of ways around the unpalatable implications for the poor.

So much of economics is counterintuitive, yet it is one of those topics that everyone feels they understand, regardless of their level of education. That's why I think it needs to be taught more.


Quote:

Properly managed, consumption taxes can succeed in taxing those who can afford to pay, while sparing those who cannot.

This should be done via income taxes, not by making the GST complicated.


Quote:

In general, income taxation succeeds only with wage earners - the rich can afford accountants to evade that tax.

Do you know what percentage of income tax revenue is provided by high income earners?

Please delete wrote on Sep 10^th, 2010 at 11:44am:

"And your point is " Just trying to be sure you've thought this through. And yes, the states patently need more money. Since the GST came in, for whatever reason, no state seems to be able to provide the basics.

Mainly due to gross mismanagement and waste.

freediver wrote on Sep 11^th, 2010 at 9:49am:

Quote: In general, income taxation succeeds only with wage earners - the rich can afford accountants to evade that tax. Do you know what percentage of income tax revenue is provided by high income earners?

Do you know what it would be without the accounting tricks and minimisation schemes?

How about we start with what it actually is? Or are the facts inconvenient for you?

Increase GST, expert urges


A VISITING tax expert has urged Australia to increase the goods and services tax and slash other taxes to make life simpler for businesses and householders.

- from the Opening Post

Don't you love it when visitors drop by .. and tell you how you should run your life.