# Should the GST be raised?



## white_goodman (28 August 2008)

Should the GST be raised and managed by the RBA similar to IR... the only reason i suggest this is surely a tax that will curb EVERYONES spending ie GST will surely slow down inflation pressures better then affecting just those people with a mortgage through lowering and raising IR... i know IR has flow on effects but still worth a discussion i think..

thoughts?


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## nioka (28 August 2008)

white_goodman said:


> Should the GST be raised and managed by the RBA similar to IR... the only reason i suggest this is surely a tax that will curb EVERYONES spending ie GST will surely slow down inflation pressures better then affecting just those people with a mortgage through lowering and raising IR... i know IR has flow on effects but still worth a discussion i think..
> 
> thoughts?




 Interesting thought. It would take the politics out of the equation if an independent body like the RBA were involved. Not only would it control spending by individuals but it would go some way towards controlling the amount of funds available to state governments.

Personally I'd like to see some control on the amount of credit that consumers were allowed. It is easy personal credit that is behind our problems.


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## Whiskers (28 August 2008)

white_goodman said:


> Should the GST be raised




How dare you even mention such tabo. :

****, if the polies get wind of any support for such an idea... well, what's life like in the Bahamas.



> and managed by the RBA similar to IR...




You don't mean that do ya! Did you say you worked for the treasury!


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## Julia (28 August 2008)

Well, it won't happen because Rudd & Co. have categorically ruled out any increase in the GST.
However, it does seem a reasonable suggestion except that it would unfairly penalise those on the lower income levels, i.e. if GST is applied to all basic requirements of everyday living, people on low incomes incur a greater percentage increase on their spending with a GST rise.

Btw high interest rates don't just affect homeowners with mortgages.
Business also has to borrow at the higher rates and this has a widespread effect.


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## Beej (28 August 2008)

nioka said:


> Personally I'd like to see some control on the amount of credit that consumers were allowed. It is easy personal credit that is behind our problems.




That's *exactly* what the RBA is meant to be controlling via the movements/control of official interest rates!

Cheers,

Beej


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## Macquack (29 August 2008)

white_goodman said:


> Should the GST be raised and managed by the RBA similar to IR... thoughts?




Your kidding, right.

Lets have the GST rate changed every month at the whim of a bunch of ex-school prefects.

I agree with Whiskers, this thread should be deleted immediately.


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## Stan 101 (29 August 2008)

Initial thought is no. Purely because we have a multitude of people who can't work out 10% GST on an item. Imagine 18.5%?

More import issues at hand though.


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## jonnycage (29 August 2008)

probably easier the better for most, instead of mass confusion 

anyones guess


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## Mike Trader (29 August 2008)

Yes I think the GST should be like interest rates raised and lowered,according to   the demand -supply situation ,it would have much more immediate impact than Interest rate changes that take a while to filter through the economy,except that governments would be reluctant when lowering  it, because of the impact on revenue.


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## doogie_goes_off (29 August 2008)

The GST already killed off Micro-business and Small business would go the same way with variable GST, also the changes would be subject to shifting sales from month-month or quarter to quarter giving even more failed economics students a job at the tax office, which is already a monster.


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## Family_Guy (29 August 2008)

HOW THE TAX SYSTEM WORKS

Suppose that every day, ten people go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth (the richest) would pay $59.

So, that's what they decided to do.

The ten drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20." Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four were unaffected. They would still drink for free. But what about the other six - the paying customers? How could they divide the $20 windfall so that everyone would get their "fair share"?

They realised that $20 divided by six is $3.33. But if they subtracted that from everyone's share, then the fifth and the sixth would each end up being paid to drink their beer. So, the bar owner suggested that it would be fair to reduce each drinker's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:

The fifth person, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the drinkers began to compare their savings.

"I only got a dollar out of the $20," declared the sixth. She pointed to the tenth man, "but he got $10!" "Yes, that's right," exclaimed the fifth. "I only saved a dollar too. It's unfair that he got ten times more than I did" "That's true!!" shouted the seventh. "Why should he get $10 back when I got only two? The wealthy get all the breaks" "Wait a minute," yelled the first four in unison. "We didn't get anything at all. The system exploits the poor"

The nine drinkers surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill.

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible!


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## doogie_goes_off (29 August 2008)

Agreed, top marginal tax rates are too high and the GST is a killer on everyone. I'd really like to see the government lower the GST, that would shut the States up and put a hole in the never ending surplus that is dished out for able bodied lazy buggers and bonus welfare.


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## nomore4s (29 August 2008)

Mike Trader said:


> Yes I think the GST should be like interest rates raised and lowered,according to the demand -supply situation ,it would have much more immediate impact than Interest rate changes that take a while to filter through the economy,except that governments would be reluctant when lowering  it, because of the impact on revenue.




You can't be serious.

As if we aren't already over taxed. Also our tax system is incredibly complicated as it is and you want to play around with the GST rate every quarter. You got to be kidding me.

Have any of you thought about how difficult this would be for businesses trying to adjust GST rates every 1/4? Think about all the extra work for small businesses trying to admin this?

And how will this affect our lower income earners & what about pensioners? It's hard enough for them to budget now let alone if prices change every 1/4 due to GST.

What will the Government do with the extra money from GST if it's raised or where will the short fall come from if they are lowered? Especially if the decision to raise or lower GST is made by an "independent body".

Not a vey well thought out idea imo.


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## nioka (29 August 2008)

nomore4s said:


> You can't be serious.
> Have any of you thought about how difficult this would be for businesses trying to adjust GST rates every 1/4? Think about all the extra work for small businesses trying to admin this?
> 
> Not a vey well thought out idea imo.




You are right. While I think the idea has some positives I agree that it would be an administrative nightmare, especially for small business. Take it off the list for future implementation.


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## Stan 101 (29 August 2008)

Why not abolish income tax for the individual, raise the GST to a flat rate, adjust payroll tax, and come up with a fair rebate system for investment? Simplistic for sure, but must have merit.

Having the GST fluctuate would be an absolute nightmare. Imagine how hard it would be for just a small retail business to reconcile the end of month with GST changes. 



nomore4s said:


> You can't be serious.
> 
> As if we aren't already over taxed.




Nomore4s, how can it be we are overtaxed when we still have poor roads, ordinary infastructe in transport, mediacal and education?
We benefit by living in a large country with low population. The down side of this is servicing things like our national highway. Maintaining highway one alone is a huge burden on our kitty. Where else will the money come from for all the improvements and maintenance to our services?


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## numbercruncher (29 August 2008)

Yes they should raise it, be proactive , do it now before the perverbial hits the fan.




> August 28, 2008 12:00am
> 
> THE NSW Government's finances are at risk of collapse with almost $1 billion worth of stamp duty forecast to be wiped from the NSW Budget over the next year as the global financial crisis hits home.
> 
> ...




http://www.news.com.au/dailytelegraph/story/0,22049,24252263-5001021,00.html


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## nomore4s (29 August 2008)

Stan 101 said:


> Nomore4s, how can it be we are overtaxed when we still have poor roads, ordinary infastructe in transport, mediacal and education?
> We benefit by living in a large country with low population. The down side of this is servicing things like our national highway. Maintaining highway one alone is a huge burden on our kitty. Where else will the money come from for all the improvements and maintenance to our services?




They could double our taxes and we still won't have any improvement in any of those areas.

IMO it has more to do with how much money governments throw away. Look at the surplus the government has had and yet none of those things have improved, infact most have deteriorated. Paying more tax won't fix those problems.

If you don't think we're overtaxed fine, but I do and judging by the tax cuts we've received over the past few years, so does the government. Even just updating the tax system to make it easier for everyone involved would be a start.


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## aacantona (29 August 2008)

Just out of curiosity can anybody remember the last time we had a budget deficit?


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## bassmanpete (29 August 2008)

Family_Guy, that's exactly what happened in the UK in the '50s and '60s. The highest rate of tax (super tax it was called) was 19/6 in the pound. This was the inspiration for George Harrison to write Taxman with the lines:

There's one for you, nineteen for me. 
'Cause I’m the taxman, 
Yeah, I’m the taxman. 

If you spent more than 6 months in the country you paid the tax. All the wealthiest people spent 6 months in the UK and the other 6 months in their villas in the South of France, the Bahamas, or wherever.


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## Stan 101 (29 August 2008)

aacantona said:


> Just out of curiosity can anybody remember the last time we had a budget deficit?





When have we not had a budget deficit? Just because the Government declares a surplus for the fiscal year, does not mean we are debt free. Are we simply paying IO on our world bank loans or are we going hard at P&I? Don't fall for the "surplus" line.

This country needs to pour some of this "surplus" into something grand, something monumental. Lets start our next snowy river style project. A 20 year plan.


Beaurocracy costs us for sure, and will always do so. The bigger it gets the harder it is to hold in the reins.


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## Julia (29 August 2008)

Stan 101 said:


> Why not abolish income tax for the individual, raise the GST to a flat rate, adjust payroll tax, and come up with a fair rebate system for investment? Simplistic for sure, but must have merit.



Stan 101, this would be very unfair on people with low incomes.   As I've pointed out before someone on a government benefit needs the same amount of food etc for basic survival as someone on $1m p.a.   So for the high income earner to pay no tax would be very inequitable.


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## Mike Trader (29 August 2008)

Governments already vary sales tax anyway-extra tax on alcopops,higher tax on cigarettes,double taxation on Petrol,the coming Luxury car tax,massive coming support for the car industry which dilutes gst anyway and remember state stamp duty on house purchases was meant to be abolished under the new gst system.Its interesting that before gst there were different tax rates on different items -lots of them ,yet small business survived better than under the GST sales tax system.The problem is that  BAS reporting includes all taxes not just the GST-on a quarterly basis means it is  like the old Provisional tax system paying tax upfront before the tax year is over based on last years tax-thats what makes it difficult for small business-from my personal experience.Larger higher cashflow businesses have less trouble managing these problems(or they  should anyway),Imho.


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## Stan 101 (29 August 2008)

Julia said:


> Stan 101, this would be very unfair on people with low incomes.   As I've pointed out before someone on a government benefit needs the same amount of food etc for basic survival as someone on $1m p.a.   So for the high income earner to pay no tax would be very inequitable.




Touche! Raise the minimum wage if that is required. my post was only a brief, not the full report :


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## Julia (29 August 2008)

Stan 101, I suspect Treasury is not beating a path to either my door or yours in their quest for an equitable tax system!


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## drsmith (23 April 2013)

No prizes for guessing what the state premiers have been discussing, and it's not what Labor's thinking either.



> THE eastern states would have to give up $2.5 billion over two years to meet Western Australia's demand to get back 75 cents in the dollar on the GST its citizens pay.
> 
> Analysis by the Treasurer's office suggests NSW would have to forgo $1.04 billion, Victoria would lose $813 million and Queensland would be docked $662 million to deliver on WA's demand.
> 
> Labor has accused Tony Abbott of preparing a "secret plan" with WA Premier Colin Barnett to boost WA's GST payments at the expense of other states.






> "(WA Premier) Colin Barnett as I understand it thinks that it might be possible talking to the premiers of Queensland, New South Wales and Victoria and himself, to come up with something that doesn't disadvantage the smaller states but which is fairer to the bigger states," the Opposition Leader said.




http://www.theaustralian.com.au/nat...t-was-gst-demand/story-fn59nsif-1226626881369


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## qldfrog (23 April 2013)

Stan 101 said:


> Touche! Raise the minimum wage if that is required. my post was only a brief, not the full report :



except that when the "rich..er" families splash 30k on a new kitchen or car, the gst raised will match the gst spent by dozen of families on lower income, and also remember that gst is not raised on most of basic necessities like raw food, [and I am not going to cry for poor bunnies who see they fast food bill increase...there are enough  food show to teach cooking these days)

IMHO, the GSt is the fairer tax system of all, no need to spend billions propping up super: if you save, you pay less tax, if you burn, you pay. And no avoidandance or far less at least
an ideal tax linked directly to the income and the style of everyone

qld frog in defense of the GST
 amazing, i am pushing forward a tax!! this should not prevent the government to reduce its waste and pork barrelling attitude


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## McLovin (23 April 2013)

qldfrog said:


> IMHO, the GSt is the fairer tax system of all, no need to spend billions propping up super: if you save, you pay less tax, if you burn, you pay. And no avoidandance or far less at least
> an ideal tax linked directly to the income and the style of everyone





It's not linked to income at all. It's linked to consumption. And given that you would probably need to double or triple the rate of the GST in order to cover the shortfall from no personal income tax the overwhelming burden would fall on the poorest part of society, for whom a base level of consumption will usually eat up most of their earnings.


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## Knobby22 (23 April 2013)

No. Not if they are only going to use the money to lower business tax rates.


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## drsmith (23 April 2013)

The only way the states can agree to a redistribution of the tax that doesn't leave any state out of pocket is to increase the total tax take of the GST. There's only two options there, broadening the base or increasing the rate.

In the lead up to an election, it will be interesting to see how the federal politicians dance around this one.


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## tinhat (23 April 2013)

There's no doubt that GST will go up and I predict that it will be raised under the next government (after the next federal election).


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## drsmith (23 April 2013)

tinhat said:


> There's no doubt that GST will go up and I predict that it will be raised under the next government (after the next federal election).



My preference would be to see a broadening of the base in the context of broader tax reform, but I suspect that any change will simply be a tax grab by increasing the rate with tax reform coming a distant second.


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## McLovin (23 April 2013)

drsmith said:


> The only way the states can agree to a redistribution of the tax that doesn't leave any state out of pocket is to increase the total tax take of the GST. There's only two options there, broadening the base or increasing the rate.
> 
> In the lead up to an election, it will be interesting to see how the federal politicians dance around this one.




I see a lot of things happening to the tax system over the next ten years, a higher GST is one of them (I'm trying to think of a country that hasn't raised its GST). There seems to be a realisation emerging in the Western world that the big, generous welfare handouts funded by deficits aren't sustainable, although they buy lots of votes. In Australia people seem to be slowing waking up to the fact that the last 10 years was an aberration not a permanent change. 

While Australia's system doesn't seem as generous, this article from the NY Times about Denmark does highlight the problems faced by many countries...

http://www.nytimes.com/2013/04/21/w...nk-a-welfare-state-ample-to-a-fault.html?_r=0

This quote could easily be in reference to Australia, IMO...



> “Before the crisis there was a sense that there was always going to be more and more,” Bjarke Moller, the editor in chief of publications for Mandag Morgen, a research group in Copenhagen. “But that is not true anymore. There are a lot of pressures on us right now. We need to be an agile society to survive.”


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## drsmith (23 April 2013)

McLovin said:


> While Australia's system doesn't seem as generous, this article from the NY Times about Denmark does highlight the problems faced by many countries...
> 
> http://www.nytimes.com/2013/04/21/w...nk-a-welfare-state-ample-to-a-fault.html?_r=0
> 
> This quote could easily be in reference to Australia, IMO...



The following bit of that article is interesting in the context of our proposed NDIS,



> Officials have also begun to question the large number of people who are receiving lifetime disability checks. About 240,000 people ”” roughly 9 percent of the potential work force ”” have lifetime disability status; about 33,500 of them are under 40. The government has proposed ending that status for those under 40, unless they have a mental or physical condition that is so severe that it keeps them from working.
> 
> Instead of offering disability, the government intends to assign individuals to “rehabilitation teams” to come up with one- to five-year plans that could include counseling, social-skills training and education as well as a state-subsidized job, at least in the beginning. The idea is to have them working at least part time, or studying.
> 
> ...




A safety net is necessary, but go too far and it just encourages a sense of unrealistic entitlement. That's Denmark's lesson.


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## McLovin (23 April 2013)

drsmith said:


> A safety net is necessary, but go too far and it just encourages a sense of unrealistic entitlement. That's Denmark's lesson.




I agree, and the sense of entitlement is plain to see in other areas of welfare spending. That recent survey that found that richest 5% of Australians think they pay too much tax but want the rich to pay more tax shows just how skewed people's expectations are.

The problem with social security is making it fair. I don't want anyone who is in genuine need to miss out on the NDIS, but at the same time that opens it up to abuse, unfortunately.

Out of curiosity, how many people are on disability pensions here? I would have thought it would be about the same sort of percentage. If the NDIS means some of those with physical disabilities can get the equipment they require to get back into work, then that's great.

Found it here:

http://www.abc.net.au/news/2013-04-...ny-people-claiming-disability-support/4615276

818,000, or a shade over 7% of the working population, on disability pensions.



> Mr Hall rejects the suggestion that the massive growth in people on the disability pension is a result of a wide-scale rip-off.
> 
> "I don't think there's large-scale rorting, I think we've set up a system which has failed people, and I think our welfare system as a whole is failing people," he said.
> 
> "Rather than saying 'Let's create participation, let's put people on a benefit', we can almost park them there and forget about them, and we're saying that is fundamentally wrong."


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## FlyingFox (23 April 2013)

McLovin said:


> 818,000, or a shade over 7% of the working population, on disability pensions.




Wow that is larger than I thought it would be. It is very hard to believe that there is no rorting in that...


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## FlyingFox (23 April 2013)

Curious as to whether there are any studies into the impact of consumption taxes such as the GST on growth etc?


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## sptrawler (23 April 2013)

McLovin said:


> I agree, and the sense of entitlement is plain to see in other areas of welfare spending. That recent survey that found that richest 5% of Australians think they pay too much tax but want the rich to pay more tax shows just how skewed people's expectations are.
> 
> The problem with social security is making it fair. I don't want anyone who is in genuine need to miss out on the NDIS, but at the same time that opens it up to abuse, unfortunately.
> 
> 818,000, or a shade over 7% of the working population, on disability pensions.




Does that include veterans pensions?


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## sptrawler (23 April 2013)

Isn't it funny, we've being saying for two years this will end up in tears, then this thread gets thrown up.
Also Mclovin is participating, which gives it a lot of cred, for some.


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## McLovin (23 April 2013)

sptrawler said:


> Does that include veterans pensions?




Only veterans on disability pensions. Of course any criticism/generalisation/conclusion I'm making would exclude those who fought for this country.

The guy from Mission Australia makes a valid point that there is a sub-section of those on disability pensions who want to work but can't because they can't afford the required equipment (wheelchairs etc).


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## sptrawler (23 April 2013)

McLovin said:


> Only veterans on disability pensions. Of course any criticism/generalisation/conclusion I'm making would exclude those who fought for this country.
> 
> The guy from Mission Australia makes a valid point that there is a sub-section of those on disability pensions who want to work but can't because they can't afford the required equipment (wheelchairs etc).




Also there are those, who I assume are scared to try and work, incase they lose their pensions, then lose their jobs


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## Knobby22 (23 April 2013)

I agree with some others here though. The Libs are softening us up for a rise in the GST. If they go through with it, I will be bitterly disappointed. The cost of living is high enough as it is without getting a 2% rise in price of everything.


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## Julia (24 April 2013)

Knobby22 said:


> I agree with some others here though. The Libs are softening us up for a rise in the GST. If they go through with it, I will be bitterly disappointed. The cost of living is high enough as it is without getting a 2% rise in price of everything.



I agree.  I'll be more than ever disgusted with Labor if this is how we are forced to make up for their profligate spending.


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## wayneL (24 April 2013)

Julia said:


> I agree.  I'll be more than ever disgusted with Labor if this is how we are forced to make up for their profligate spending.




Too late for me, I'm already *for*ever disgusted with Labor, ever since the Whitlam era. Curious that many aspects of that misadventure are repeating themselves. :frown:


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## prawn_86 (24 April 2013)

I find it interesting that so many people on this forum still vote for either Labor or Libs, ie the 2 main parties. I would have thought with a (supposedly) smarter, more savvy/educated demographic, there would be more ASF users who would look outside the main political parties


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## Trembling Hand (24 April 2013)

prawn_86 said:


> I find it interesting that so many people on this forum still vote for either Labor or Libs, ie the 2 main parties. I would have thought with a (supposedly) smarter, more savvy/educated demographic, there would be more ASF users who would look outside the main political parties




Unfortunately it doesn't matter. Your vote will end up with 1 of the two parties anyway.


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## Knobby22 (24 April 2013)

Julia said:


> I agree.  I'll be more than ever disgusted with Labor if this is how we are forced to make up for their profligate spending.




Well yes. Something has to give, though I don't see why it has to be the GST. 
That latest education handout (Gonski) is just pathetic and removed the last remaining tiny shreds of respect I had for the Prime Minister.


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## McLovin (24 April 2013)

prawn_86 said:


> I find it interesting that so many people on this forum still vote for either Labor or Libs, ie the 2 main parties. I would have thought with a (supposedly) smarter, more savvy/educated demographic, there would be more ASF users who would look outside the main political parties




From what I've seen outside the two parties is a rabble of special interest groups, that aren't fit to do much else except promote their primary cause. Maybe I'll vote for the Australian Sex Party. The caucus meetings would be interesting; "keys in the bowl ministers".


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## Trembling Hand (24 April 2013)

McLovin said:


> Maybe I'll vote for the Australian Sex Party. The caucus meetings would be interesting; "keys in the bowl ministers".




Actually if you have a look at their _key _ ()policies they look pretty sensible, 

http://www.sexparty.org.au/Policies/


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## prawn_86 (24 April 2013)

McLovin said:


> From what I've seen outside the two parties is a rabble of special interest groups, that aren't fit to do much else except promote their primary cause. Maybe I'll vote for the Australian Sex Party. The caucus meetings would be interesting; "keys in the bowl ministers".




Agree, but i guess each party has to start somewhere. I like the idea of Senator Online


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## McLovin (24 April 2013)

Trembling Hand said:


> Actually if you have a look at their _key _ ()policies they look pretty sensible,
> 
> http://www.sexparty.org.au/Policies/




Actually, all jokes aside, some of their policies aren't too bad. And the tees are pretty cool too.

http://www.cafepress.com/sexparty.570432083

They have a membership mistress, and a mystery member who takes his name after a pubic wig.


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## FlyingFox (24 April 2013)

McLovin said:


> From what I've seen outside the two parties is a rabble of special interest groups, that aren't fit to do much else except promote their primary cause. Maybe I'll vote for the Australian Sex Party. The caucus meetings would be interesting; "keys in the bowl ministers".




How about these guys?

http://www.populationparty.org.au/


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## Julia (24 April 2013)

Trembling Hand said:


> Unfortunately it doesn't matter. Your vote will end up with 1 of the two parties anyway.



Exactly.  I'd rather choose which main party my vote goes to than depend on some insignificant minor party's preferences.


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## drsmith (24 April 2013)

prawn_86 said:


> I find it interesting that so many people on this forum still vote for either Labor or Libs, ie the 2 main parties. I would have thought with a (supposedly) smarter, more savvy/educated demographic, there would be more ASF users who would look outside the main political parties



What specific party or parties did you have in mind ?


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## McLovin (24 April 2013)

FlyingFox said:


> How about these guys?
> 
> http://www.populationparty.org.au/




The bouncer at one of my locals has his own political party, some sort of libertarian mob (he tried explaining it to me once but I'd had enough beers for Burnsie to deem me unsafe to the community and in need of being locked up). He is also a wedding singer and the other day he was in blue overalls doing some renovations "for his real estate company", so has his fingers in all the pies so to speak.

And that about sums up minor political parties, IMO.


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## drsmith (24 April 2013)

Knobby22 said:


> I agree with some others here though. The Libs are softening us up for a rise in the GST. If they go through with it, I will be bitterly disappointed. The cost of living is high enough as it is without getting a 2% rise in price of everything.



No federal party with half a brain would want to initiate this only to get dragged into the inevitable bickering between the states about how any such increase would be distributed. I think that at the very least, both major parties will leave it to the states to reach agreement, both on the quantum of any increase and how it's distributed. Universal agreement between the states is after all is an essential requirement for increasing the GST. 

Labor is less likely to agree to increase the GST than the Coalition because of where they are on the political spectrum. It is after all a regressive tax.

A sensible option to me would be to broaden the base of the GST upon removal of the carbon tax as this would greatly simplify our consumption based taxes. The politics of this though would make it near impossible to achieve as an option. 

Any increase in the GST rate should only be done by electoral mandate.


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## sydboy007 (24 April 2013)

drsmith said:


> No federal party with half a brain would want to initiate this only to get dragged into the inevitable bickering between the states about how any such increase would be distributed. I think that at the very least, both major parties will leave it to the states to reach agreement, both on the quantum of any increase and how it's distributed. Universal agreement between the states is after all is an essential requirement for increasing the GST.
> 
> Labor is less likely to agree to increase the GST than the Coalition because of where they are on the political spectrum. It is after all a regressive tax.
> 
> ...




Certainly broadening it to food, book, education, healthcare would help to make it less regressive as those with higher incomes tend to spend more on them eg the minimum wage earner might buy the coles budget cuts of meat while the 6 figure earner is quite happy taking home the king island beef for $35 a kilo.

I'd much rather a broader base than a rise in the rate.


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## drsmith (24 April 2013)

I would have thought that the less well off would spend a greater proportion of their income on food. 

Above all else, we have to eat.


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## Julia (24 April 2013)

drsmith said:


> I would have thought that the less well off would spend a greater proportion of their income on food.
> 
> Above all else, we have to eat.



Agree.  I would hate to see it extended to fresh foods in a time when we are trying to do something about the rise in obesity.  Sydboy, there are hundreds of thousands of Australians on really low incomes who are struggling to pay basic utilities and food as it is.  Extending the GST across all fresh foods isn't going to bother the affluent in the least, but will have a devastating effect on families trying to find enough to pay their electricity bills.

I don't want to be rude or critical, but so often what you espouse seems to be without consideration for the ever growing number of poor people in Australia.


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## drsmith (24 April 2013)

Julia said:


> Agree.  I would hate to see it extended to fresh foods in a time when we are trying to do something about the rise in obesity.



My thinking was along the lines of broadening the base (including fresh foods) and maintaining the carbon tax tax cuts/pension increases. That though is politically challenging on a number of fronts.

Obesity is generally a product of eating the wrong stuff and/or not enough exercise. Those who can afford fast food which is already subject to GST can afford fresh food from the supermarket whether it's subject to GST or not.


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## Julia (24 April 2013)

drsmith said:


> Obesity is generally a product of eating the wrong stuff and/or not enough exercise. Those who can afford fast food which is already subject to GST can afford fresh food from the supermarket whether it's subject to GST or not.



How so when they can feed a family of four on pasta for under $1 with a jar of sauce for under $2, compared to, say, fresh fish at (the cheaper varieties) around $15 kg plus, say, beans at $6kg, tomatoes $6 etc etc.
The only really cheap vegetables are potatoes, carrots and onions.

I don't think all poor people are regular customers of relatively expensive fast food outlets.

If we are trying to encourage the consumption of nutritious food, the last thing we should be doing is slapping an additional tax on it.


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## sydboy007 (25 April 2013)

Julia said:


> How so when they can feed a family of four on pasta for under $1 with a jar of sauce for under $2, compared to, say, fresh fish at (the cheaper varieties) around $15 kg plus, say, beans at $6kg, tomatoes $6 etc etc.
> The only really cheap vegetables are potatoes, carrots and onions.
> 
> I don't think all poor people are regular customers of relatively expensive fast food outlets.
> ...




The sad fact is quite often those who can least afford it spend so much on fast food.

I do agree we need to do more to encourage people to eat healthier, just don't see how it can be done.

As to the GST, I think it is the better way to raise revenue for the Govt as it affects savings less than raising income taxes or other taxes.

If the states can't bring themselves to agitate for an increase, then the only other option is a broadly based land tax scheme along the lines of what the ACT is introducing over the next decade.

The states really need to get rid of all stamp duties.  The under insurance they cause is probably the main reason I want them gone, along with the unfairness of forcing the ~2.5% of the population buying property each year to fund a large chunk of the states spending.


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## Knobby22 (8 May 2013)

From Mish's blog regarding Spain

_Step back for a second and ponder why there is a black market. Is it because taxes are too low? Of course not.

 The black market exists in size because people are fed up with government confiscation of their hard-earned money that the government then goes on to waste on ridiculous pet projects and to bail out banks that are in trouble.

 There will always be some fraud and corruption, but 19% of GDP, if true, is one hell of a black market. Rather than crack down on the taxes purportedly lost, I suggest eliminating the economic conditions that created such a sizable black market in the _first place. *The place to start is with an overhaul of the preposterously high VAT scheme*].
Read more at http://globaleconomicanalysis.blogspot.com/#2EdAlxXv1qDLQmv4.99 

*The point is that raising the GST (called the VAT in Spain) encourages the black market*. Another reason among many why I am against it being raised no matter how much the right wing press push it. Mish by the way is very right wing.


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## clowboy (9 May 2013)

This is a really interesting thread to read.  It amazes me though that every single solution is in some way discuss what tax to increase and or what tax to introduce.

It seems these days that less spending is not even considered as an option.  Both individually and from a Govt or state perspective.

I admit that I haven't been to Europe and hence the higher tax rate countries, but out of the places I have been Australia has both the highest standard of living, in particular for the poor and low income earners and the highest tax rates.  While no one wants to be poor or should be poor, if you are in that bracket in Australia you really are the luckiest poor people in the world, IMO.

Cheap food alone does not solve obiesity and poverty, people that are being talked about here may often be buying fast food etc not from price but more from nesesity and from lack of education.

America has one of the highest % of homeless people for a first world country that I have been to (interestingly very few are imigrants) and it is far from uncommon to see a homeless man with a cheeseburger in his had, and perhaps a coke in the other.  To me this is mind bogling, sure Maccas is cheap there, but you can buy a loaf of bread for the same price as that cheeseburger, but yet they still continue to buy the cheeseburgers.

Anyway, IMO the Average australian needs to stand up an make the Govt more accountable for how they spend the already extremly high taxes and stop just accepting that taxes need to go up to cover shortfalls.  If your attitude is that increased income will solve your shortfall then you will always have a shortfall.


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