Inflation

[sptrawler]

Well at least someone is stating the obvious, they need to break the positive feed back loop that is currently going on and the Government is the only one in a position to do it. But will they?
It is probably the first time the Feds have been in a position where they can change the GST, as it requires the consent of all States.

Higher GST? Negative gearing changes? Why we’ve got to talk about tax

Experts are in furious agreement: Australia needs tax reform. So why aren’t the major political parties talking about it?

www.smh.com.au

While that was more than 20 years ago, the introduction of the GST was the last major tax reform successfully introduced by any federal government. And that’s a problem.
As our population ages, Australia is going to need to spend more on increasingly expensive services such as health and aged care, while facing fewer people of working age to pay income tax – which happens to make up the greatest proportion of federal income.

The problem is one that all economists (who can never usually agree on anything) are in furious unison over: Australia needs tax reform.
Danielle Wood, who starts as head of the Productivity Commission today, said in a recent speech that Australia has a fiscal challenge.
Spending on the NDIS, increasingly costly medicines through the Medicare Benefits Schedule, aged care and defence are all forecast to grow at a rapid pace.
The government also relies heavily on income tax to fund these necessities. In this year’s federal budget, it expected individuals to pay more than $300 billion in income tax, more than half the government’s total tax revenue take (excluding GST, which gets handed straight back to the states).
This is a problem, said Wood in her Fairbairn lecture in Melbourne last month because,“We are asking future generations to bear the costs of today’s inaction.”
So why aren’t the major political parties talking about it?
Wood said that tax reform is not for the faint-hearted, as political scare campaign rumblings begin at the first whiff of it.
Loading

 

[divs4ever]

Well at least someone is stating the obvious, they need to break the positive feed back loop that is currently going on and the Government is the only one in a position to do it. But will they?
It is probably the first time the Feds have been in a position where they can change the GST, as it requires the consent of all States.

Higher GST? Negative gearing changes? Why we’ve got to talk about tax

Experts are in furious agreement: Australia needs tax reform. So why aren’t the major political parties talking about it?

www.smh.com.au

While that was more than 20 years ago, the introduction of the GST was the last major tax reform successfully introduced by any federal government. And that’s a problem.
As our population ages, Australia is going to need to spend more on increasingly expensive services such as health and aged care, while facing fewer people of working age to pay income tax – which happens to make up the greatest proportion of federal income.

The problem is one that all economists (who can never usually agree on anything) are in furious unison over: Australia needs tax reform.
Danielle Wood, who starts as head of the Productivity Commission today, said in a recent speech that Australia has a fiscal challenge.
Spending on the NDIS, increasingly costly medicines through the Medicare Benefits Schedule, aged care and defence are all forecast to grow at a rapid pace.
The government also relies heavily on income tax to fund these necessities. In this year’s federal budget, it expected individuals to pay more than $300 billion in income tax, more than half the government’s total tax revenue take (excluding GST, which gets handed straight back to the states).
This is a problem, said Wood in her Fairbairn lecture in Melbourne last month because,“We are asking future generations to bear the costs of today’s inaction.”
So why aren’t the major political parties talking about it?
Wood said that tax reform is not for the faint-hearted, as political scare campaign rumblings begin at the first whiff of it.
Loading

how about we talk about Government spending ( and borrowing in a rising interest rate scenario )

i am not sure GST was all that successful , but when performance hurdles are just chalk lines on the footpath ...

( sure they tricked us to get it in , but did it reduce the number of taxes and levies in the long run ? )

 

[sptrawler]

how about we talk about Government spending ( and borrowing in a rising interest rate scenario )

i am not sure GST was all that successful , but when performance hurdles are just chalk lines on the footpath ...

( sure they tricked us to get it in , but did it reduce the number of taxes and levies in the long run ? )

Very true, but that comes down to the States in a lot of cases they were meant to remove some taxes, the GST still is the most efficient way of broad based taxation.

No one can really avoid it somewhere along the chain everyone pays it, when they spend their money, whereas most other taxes are specifically focused and are usually quite easy to sidestep.

Governments always over spend, that will never stop, who pays for it is all that can be changed. Currently those with a mortgage and those who employ people are wearing the brunt of it, the only way you can change that is by spreading the load.

 

[mullokintyre]

Very true, but that comes down to the States in a lot of cases they were meant to remove some taxes, the GST still is the most efficient way of broad based taxation.

No one can really avoid it somewhere along the chain everyone pays it, when they spend their money, whereas most other taxes are specifically focused and are usually quite easy to sidestep.

Governments always over spend, that will never stop, who pays for it is all that can be changed. Currently those with a mortgage and those who employ people are wearing the brunt of it, the only way you can change that is by spreading the load.

Makes sense to me to up the GST take by 5% every ten years till we get to 20%, and compensate anyone earning under 100k indexed to the CPI.
And remove all exemptions as well, including health, fresh food , medical expenses, the lot.
Its the only to get money from the tax avoiders, whether legally, or within the legal system.
Mick

 

[sptrawler]

Makes sense to me to up the GST take by 5% every ten years till we get to 20%, and compensate anyone earning under 100k indexed to the CPI.
And remove all exemptions as well, including health, fresh food , medical expenses, the lot.
Its the only to get money from the tax avoiders, whether legally, or within the legal system.
Mick

Yes there isn't many other options, also introduce a levy to tax overseas property investors, what people aren't realising is we are actively pushing ourselves down the international economic ladder while subsidising those who are overtaking us to become our landlords.

Our currency is falling, their currency is rising and we let them buy our houses cheap, a real loser attitude IMO, Australia always taking it where they shouldn't.

While they are at it sort out negative gearing, which is just another public service that was privatised and use the savings to build public housing.

 

[mullokintyre]

Yes there isn't many other options, also introduce a levy to tax overseas property investors, what people aren't realising is we are actively pushing ourselves down the international economic ladder while subsidising those who are overtaking us to become our landlords.

Our currency is falling, their currency is rising and we let them buy our houses cheap, a real loser attitude IMO, Australia always taking it where they shouldn't.

While they are at it, sort out negative gearing and use the savings to build public housing.

I don't have a problem with fools overseas paying grossly inflated real estate prices.
they can't take it back to their own country, and somebody here in OZ greatly benefits from their stupidity.
Mick

 

[sptrawler]

I don't have a problem with fools overseas paying grossly inflated real estate prices.
they can't take it back to their own country, and somebody here in OZ greatly benefits from their stupidity.
Mick

That would be great except it becomes a case of diminishing returns, as Australians have to borrow more to to buy the more expensive houses, there is less money available to grow businesses and create jobs.
The overseas investors can still buy at inflated prices, it is just that they pay more than an Australian as a purchase tax, which in turn reduces the tax an Australian has to pay.
Or it could go toward supplying social housing, for those who can't afford to pay grossly inflated prices and the Australian taxpayer has to subsidies with rental assistance so that they can rent off the overseas owner.
And they're the fools?

 

[Value Collector]

It’s the only to get money from the tax avoiders, whether legally, or within the legal system.
Mick

It can actually be an incentive for people to avoid tax, one of the reasons many people choose to deal in cash is to avoid gst.

I recently renovated two houses, and the number of tradies that asked for cash saying they wouldn’t charge me gst was huge.

Obviously the way the scam works is the give me a price 10% lower if I pay cash, because they won’t have to pay GST, but then they get to pocket the rest of the amount tax free.

The larger the GST amount the bigger the incentive for people to avoid both gst and income tax.

I had everyone from tree loppers, roof painters, concreting, flooring, fencing and an electrician all request cash for a discount.

Yes GST will catch some of the tax when they spend that cash, provided they don’t in turn spend the cash at places doing similar things.

 

[Belli]

It can actually be an incentive for people to avoid tax, one of the reasons many people choose to deal in cash is to avoid gst.

I recently renovated two houses, and the number of tradies that asked for cash saying they wouldn’t charge me gst was huge.

Obviously the way the scam works is the give me a price 10% lower if I pay cash, because they won’t have to pay GST, but then they get to pocket the rest of the amount tax free.

The larger the GST amount the bigger the incentive for people to avoid both gst and income tax.

I had everyone from tree loppers, roof painters, concreting, flooring, fencing and an electrician all request cash for a discount.

Yes GST will catch some of the tax when they spend that cash, provided they don’t in turn spend the cash at places doing similar things.

Yes, I had the same when I was having work done on my home. The builder I finally engaged didn't have that approach and the cash activity really got up his nose. He'd bid for jobs only to be undercut by the cash cowboys. He'd then get calls at some later stage from those same owners to fix defects. Those jobs ended up costing more than his original quote. He said to me many were probably not licenced or blow-ins from out of town.

All to "save" the owners 10% when it was saving those "tradies" 30% or so in tax.

A bit crazy I think.

 

[sptrawler]

It can actually be an incentive for people to avoid tax, one of the reasons many people choose to deal in cash is to avoid gst.

I recently renovated two houses, and the number of tradies that asked for cash saying they wouldn’t charge me gst was huge.

Obviously the way the scam works is the give me a price 10% lower if I pay cash, because they won’t have to pay GST, but then they get to pocket the rest of the amount tax free.

The larger the GST amount the bigger the incentive for people to avoid both gst and income tax.

I had everyone from tree loppers, roof painters, concreting, flooring, fencing and an electrician all request cash for a discount.

Yes GST will catch some of the tax when they spend that cash, provided they don’t in turn spend the cash at places doing similar things.

The bartering system (cashies) always has and always will exist, with the GST when the cash is spent 10% of it goes to the Govt, in the old days with wholesale sales tax the administration costs were huge.
GST is still the easiest and most efficient way, for Govt to increase the tax take, over a broader base.
By the way, if you report the tradesman to the ATO, it puts them in a world of pain and you being a honest law abiding citizen would do that in the name of fairness?

 

[sptrawler]

Yes, I had the same when I was having work done on my home. The builder I finally engaged didn't have that approach and the cash activity really got up his nose. He'd bid for jobs only to be undercut by the cash cowboys. He'd then get calls at some later stage from those same owners to fix defects. Those jobs ended up costing more than his original quote. He said to me many were probably not licenced or blow-ins from out of town.

All to "save" the owners 10% when it was saving those "tradies" 30% or so in tax.

A bit crazy I think.

Yes, try getting warranting or remedial work done for a job done as a "cashie", you can always take them to fair trading, or court.

Also if someone in your rental gets hurt and an investigation happens, that's another trap for younger players.

I'm a licensed A grade electrician, I pay someone to do electrical work at my place, because I like to get an electrical safety certificate registered.
Especially if I need an insurance claim, or if someone gets an electric shock, to me it isn't worth some time in the can or worse lose everything.

 

[sptrawler]

I don't have a problem with fools overseas paying grossly inflated real estate prices.
they can't take it back to their own country, and somebody here in OZ greatly benefits from their stupidity.
Mick

The other issue of ever increasing house prices going unchecked, is shown in Switzerland, it works great for the rich, not so good for the apirational.

In this country, most people rent for life. Is that what we should all do?

In Switzerland, a lifetime of renting is not considered a personal failure or a shortcoming of the system.

www.smh.com.au

From the article:
At a time when young people in places like coastal California, New York and London cannot see a path to buying a home, Switzerland offers the world a glimpse of a post-ownership society. Around 36 per cent of the Swiss own their homes or apartments, the lowest rate in the West and well below the 70 per cent average in the European Union and the 67 per cent in the United States and in Australia. While many young Swiss people say they see positives in a lifetime of renting – mostly, avoiding the hassles and commitments of homeownership – they admit feeling resentful that they don’t have a choice.

The median net worth of a Swiss homeowner in their 30s is six times higher than that of a renter of the same age. And the wealth gap only widens with age. In their 70s, Swiss homeowners are 11 times wealthier than renters their age, according to a study by Ursina Kuhn at the Swiss Foundation for Research in Social Sciences in Lausanne.

The catch is that in order to become a homeowner, “you need wealth to get more wealth,” as Kuhn put it.

Martin Hoesli, a professor at the University of Geneva who has studied Swiss homeownership for decades, said that even though the math favours homeownership in the long run, many Swiss cannot afford a deposit, which by law is a minimum of 20 per cent of the purchase price. Add to that the 4 per cent in transfer costs, and the minimum deposit for the average-priced house – currently $2.9 million, according to Wüest Partner — is $526,000.
That’s a daunting number for This Schälchli, 37, who owns a hole-in-the-wall cafe at a busy intersection in Zurich. Schälchli serves more than 200 cups of coffee a day, he said, but the revenue barely allows him to pay the $3300 a month for his one-bedroom apartment, which he shares with his girlfriend and their infant son.

“I’m at zero at the end of the month,” Schälchli said of his personal finances. He doesn’t dare dream of owning his own place. “The amount of money you spend in a lifetime in rent – it’s absolutely crazy,” he said. “But there’s no obvious solution for me right now. My family has no cash. I think I’ll be renting for the rest of my life.”
Until recently, Hollenstein, the psychologist, thought the same, but for different reasons. Renting has its advantages here: landlords are restricted from raising rents without cause, like a rise in interest rates or renovation. It also allows people to live in more desirable areas. Hollenstein, 41, rents a beautiful apartment in downtown Zurich, the heart of a well-preserved medieval city.

“You don’t have to take care of the building,” she said. “If the heating doesn’t work, you just put in a call. It’s not yours.”

But things changed four years ago when she and her partner had their first child and realised they wanted a more permanent nest. They found a 139-square-metre house east of Zurich, 25 minutes away by train, for $3.6 million and plan on moving in after they finish renovating the place. The house, Hollenstein said, “is pretty – and pretty boring.”

 

[qldfrog]

The other issue of ever increasing house prices going unchecked, is shown in Switzerland, it works great for the rich, not so good for the apirational.

In this country, most people rent for life. Is that what we should all do?

In Switzerland, a lifetime of renting is not considered a personal failure or a shortcoming of the system.

www.smh.com.au

From the article:
At a time when young people in places like coastal California, New York and London cannot see a path to buying a home, Switzerland offers the world a glimpse of a post-ownership society. Around 36 per cent of the Swiss own their homes or apartments, the lowest rate in the West and well below the 70 per cent average in the European Union and the 67 per cent in the United States and in Australia. While many young Swiss people say they see positives in a lifetime of renting – mostly, avoiding the hassles and commitments of homeownership – they admit feeling resentful that they don’t have a choice.

The median net worth of a Swiss homeowner in their 30s is six times higher than that of a renter of the same age. And the wealth gap only widens with age. In their 70s, Swiss homeowners are 11 times wealthier than renters their age, according to a study by Ursina Kuhn at the Swiss Foundation for Research in Social Sciences in Lausanne.

The catch is that in order to become a homeowner, “you need wealth to get more wealth,” as Kuhn put it.

Martin Hoesli, a professor at the University of Geneva who has studied Swiss homeownership for decades, said that even though the math favours homeownership in the long run, many Swiss cannot afford a deposit, which by law is a minimum of 20 per cent of the purchase price. Add to that the 4 per cent in transfer costs, and the minimum deposit for the average-priced house – currently $2.9 million, according to Wüest Partner — is $526,000.
That’s a daunting number for This Schälchli, 37, who owns a hole-in-the-wall cafe at a busy intersection in Zurich. Schälchli serves more than 200 cups of coffee a day, he said, but the revenue barely allows him to pay the $3300 a month for his one-bedroom apartment, which he shares with his girlfriend and their infant son.

“I’m at zero at the end of the month,” Schälchli said of his personal finances. He doesn’t dare dream of owning his own place. “The amount of money you spend in a lifetime in rent – it’s absolutely crazy,” he said. “But there’s no obvious solution for me right now. My family has no cash. I think I’ll be renting for the rest of my life.”
Until recently, Hollenstein, the psychologist, thought the same, but for different reasons. Renting has its advantages here: landlords are restricted from raising rents without cause, like a rise in interest rates or renovation. It also allows people to live in more desirable areas. Hollenstein, 41, rents a beautiful apartment in downtown Zurich, the heart of a well-preserved medieval city.

“You don’t have to take care of the building,” she said. “If the heating doesn’t work, you just put in a call. It’s not yours.”

But things changed four years ago when she and her partner had their first child and realised they wanted a more permanent nest. They found a 139-square-metre house east of Zurich, 25 minutes away by train, for $3.6 million and plan on moving in after they finish renovating the place. The house, Hollenstein said, “is pretty – and pretty boring.”

So our median is dirt cheap

 

[sptrawler]

So our median is dirt cheap

Give us time, we are working on it.

 

[mullokintyre]

Our report card marked down.
At least according to the Economist.
Mick

 

[divs4ever]

Our report card marked down.
At least according to the Economist.
Mick

View attachment 165728

taken with a pinch of salt

but nice to see what some are saying

BTW they wouldn't be mistaking inflation for a 'trade surplus ' would they ?

... just asking

 

[over9k]

No russian commodity exports = commodity price increases = inflation

 

[Value Collector]

Yes, I had the same when I was having work done on my home. The builder I finally engaged didn't have that approach and the cash activity really got up his nose. He'd bid for jobs only to be undercut by the cash cowboys. He'd then get calls at some later stage from those same owners to fix defects. Those jobs ended up costing more than his original quote. He said to me many were probably not licenced or blow-ins from out of town.

All to "save" the owners 10% when it was saving those "tradies" 30% or so in tax.

A bit crazy I think.

The guys I were dealing with weren’t really “cash cowboys”, their work was great, they just wanted to rip the tax man off. In fact the tree lopper team were the most skilled guys I have ever seen cut down trees.

I denied their offers and paid full price, because I wanted receipts because it was for investment property.

 

[Value Collector]

The bartering system (cashies) always has and always will exist, with the GST when the cash is spent 10% of it goes to the Govt, in the old days with wholesale sales tax the administration costs were huge.
GST is still the easiest and most efficient way, for Govt to increase the tax take, over a broader base.
By the way, if you report the tradesman to the ATO, it puts them in a world of pain and you being a honest law abiding citizen would do that in the name of fairness?

As I said, the 10% only goes to the government if it’s spent with a law abiding business. Just because you spend the cash and it goes into a till, doesn’t mean it gets reported on a bas statement, it can just as easily be put into a shop keepers pocket. The shop owner just processes a “refund” and puts the cash in their pocket or simply asks the customer if they need a receipt if the customer says no, they don’t enter the sale in the till at all.

I did think about reporting them, but I don’t like the idea of ruining someone’s business, I just console my self with thoughts that hopefully it’s only a minor percentage of their work that doesn’t get logged.

 

[sptrawler]

As I said, the 10% only goes to the government if it’s spent with a law abiding business. Just because you spend the cash and it goes into a till, doesn’t mean it gets reported on a bas statement, it can just as easily be put into a shop keepers pocket. The shop owner just processes a “refund” and puts the cash in their pocket or simply asks the customer if they need a receipt if the customer says no, they don’t enter the sale in the till at all.

I did think about reporting them, but I don’t like the idea of ruining someone’s business, I just console my self with thoughts that hopefully it’s only a minor percentage of their work that doesn’t get logged.

As I said, bartering always has and always will exist, no matter what the Govt does, people with skills will always find a way of bypassing the system.
Jeez the big end of town, make millions and pay nothing.