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.''

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.

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.

"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.

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:

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.

"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.

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.