Should the GST be increased/widened?

Value Collector · 13 February 2015

sydboy007 said:
Bring back the previous system of bumping up the cost base by CPI. Easily done in the age of computers.

As dr Smith pointed out there is also the compensation needed for people whos capital gains, which actually took years to accumulate are forced to post the gain against a single years income.

eg, an investor that sells a property may make a gain of $200,000 which might have taken 10years to accumulate, however the $200K would be pushed onto the tax return in a single year and then force them into a high tax bracket, giving them the discount compensates this, as well as CPI

SirRumpole · 13 February 2015

Value Collector said:
the current system is the best way to ensure its 10% across all industries, and no one is disadvantaged.

the example I gave only had 3 steps, picture something like scrap metal recycling and trading, where scrap trades on thing margins, but may pass through 5 different hands before it hits the blast furnace, then there is all the manufacturing and retailing, the profit margin on the whole process would be 25% but the tax would be over 100%

Depends on what you set the gst rate at for each step.

McLovin · 13 February 2015

Julia said:
We have an obesity crisis. The woman in the checkout queue ahead of me yesterday was morbidly obese.
Her trolley contained two cartons of Pepsi Max, six loaves of sliced white bread, four cakes, two packets of frozen chips, ready made pasta 'meals', and zero fruit or vegetables.

At least she went the sugar free option!

I've never understood why some people are so averse to preparing semi-healthy food. You know exactly what went into it, it's much cheaper and it tastes infinitely better.

SirRumpole · 13 February 2015

McLovin said:
I've never understood why some people are so averse to preparing semi-healthy food. You know exactly what went into it, it's much cheaper and it tastes infinitely better.

Sheer laziness.

McLovin · 13 February 2015

SirRumpole said:
Depends on what you set the gst rate at for each step.

So some industries will pay more in tax than others?

SirRumpole · 13 February 2015

McLovin said:
So some industries will pay more in tax than others?

Some individuals pay more tax than others.

Some pay less when they should pay more.

Life just aint fair sometimes.

McLovin · 13 February 2015

SirRumpole said:
Some individuals pay more tax than others.

Some pay less when they should pay more.

Life just aint fair sometimes.

It's not the same thing. You'll just end up with capital flowing to whatever industry it is taxed the lightest in. Not to mention the inequality of such an arrangement, after spending the last thirty years removing distorting tax policies.

Sounds like a great way to kill off more than a few industries.

SirRumpole · 13 February 2015

McLovin said:
It's not the same thing. You'll just end up with capital flowing to whatever industry it is taxed the lightest in. Not to mention the inequality of such an arrangement, after spending the last thirty years removing distorting tax policies.

Sounds like a great way to kill off more than a few industries.

What industries would be most affected in your opinion ?

Julia · 13 February 2015

McLovin said:
At least she went the sugar free option!

Well, that shows how much I know about those drinks. I shouldn't assume: thought the 'Max' must have indicated maximum flavour, high caffeine, not sugar free.
Thanks for the enlightenment, McLovin.

Must have been some sort of rationalisation that all that sugar free pop would balance the rest.
Or the addition of three chocolate eggs (not the little ones) that she added as she paid with the remark "these will do me on the way home."

McLovin · 13 February 2015

SirRumpole said:
What industries would be most affected in your opinion ?

Wherever something has to pass through many hands. Like the example VC gave. If each step is taxed along the way then it will be easier to put the scrap metal on a ship and send it up to Indonesia to be processed. The local industry would be toast.

SirRumpole · 13 February 2015

McLovin said:
Wherever something has to pass through many hands. Like the example VC gave. If each step is taxed along the way then it will be easier to put the scrap metal on a ship and send it up to Indonesia to be processed. The local industry would be toast.

If you then taxed imports to compensate then maybe it wouldn't be worthwhile to send stuff offshore.

Raw materials are being sent offshore for processing already and have been for years so what are you going to do to stop it ? Where is the steel industry we used to have ? If capital flows into more lightly taxed industries because they are more efficient what's wrong with that ?

McLovin · 13 February 2015

SirRumpole said:
If you then taxed imports to compensate then maybe it wouldn't be worthwhile to send stuff offshore.

So basically you tax an industry to the point of it being non-economic but then to stop it going out of existence you put a tariff in place to protect it from imports and end users pay price. This is like Whitlam era economics.

SirRumpole said:
Raw materials are being sent offshore for processing already and have been for years so what are you going to do to stop it ? Where is the steel industry we used to have ?

I used that industry as an example, the point was industries that have long supply chains will be unfairly punished.

SirRumpole said:
If capital flows into more lightly taxed industries because they are more efficient what's wrong with that ?

They're not more efficient. Having a long supply chain is not automatically inefficient. Wasn't it Adam Smith who talked about the uplift in productivity from the divsion of labour? What you're proposing will reduce specialisation in the economy and instead force companies to do as much inhouse as possible in order to minimise transfer tax when they pass the goods down the chain. Or send it offshore.

SirRumpole · 13 February 2015

So basically you tax an industry to the point of it being non-economic but then to stop it going out of existence you put a tariff in place to protect it from imports and end users pay price. This is like Whitlam era economics.

No, you don't tax industries to the point of being non economic, you introduce the "reform" at a low rate so as to enable industries to adjust.

As to tariffs, virtually every other industrialised country subsidises their exports, what tariffs do is reduce the economic disadvantages to local industries by compensating them for the subsidies that foreign imports receive.

You can adjust the tariff rate to balance the need for our industries to be more efficient with the desire of the consumer for cheaper goods.

McLovin · 13 February 2015

SirRumpole said:
No, you don't tax industries to the point of being non economic, you introduce the "reform" at a low rate so as to enable industries to adjust.

As to tariffs, virtually every other industrialised country subsidises their exports, what tariffs do is reduce the economic disadvantages to local industries by compensating them for the subsidies that foreign imports receive.

You can adjust the tariff rate to balance the need for our industries to be more efficient with the desire of the consumer for cheaper goods.

It's not really worth debating because you just keep shifting your argument.

I have enjoyed the 1970s economics class though, so thanks.

moXJO · 13 February 2015

SirRumpole said:
No, you don't tax industries to the point of being non economic, you introduce the "reform" at a low rate so as to enable industries to adjust.

As to tariffs, virtually every other industrialised country subsidises their exports, what tariffs do is reduce the economic disadvantages to local industries by compensating them for the subsidies that foreign imports receive.

You can adjust the tariff rate to balance the need for our industries to be more efficient with the desire of the consumer for cheaper goods.

Yeah, I don't think so. Some of the things you mentioned seem like the old system which was a nightmare.

Value Collector · 13 February 2015

McLovin said:
Wherever something has to pass through many hands. Like the example VC gave. If each step is taxed along the way then it will be easier to put the scrap metal on a ship and send it up to Indonesia to be processed. The local industry would be toast.

yep, you would kill the fragmented network of small business owned scrap yards, dealers and collection enterprises, in favour of the big vertically integrated operators, who would then ship the scrap over seas.

not to mention imported steel would suddenly be very cheap in comparison to local steel.

SirRumpole · 13 February 2015

Value Collector said:
yep, you would kill the fragmented network of small business owned scrap yards, dealers and collection enterprises, in favour of the big vertically integrated operators, who would then ship the scrap over seas.

not to mention imported steel would suddenly be very cheap in comparison to local steel.

What local steel ?

As I said such industries have been struggling for years. If we want a steel industry it would be better off being government owned on a national basis. We don't have the market for a lot of small operations.

SirRumpole · 13 February 2015

McLovin said:
It's not really worth debating because you just keep shifting your argument.

I have enjoyed the 1970s economics class though, so thanks.

The argument is not shifting, it just has a lot of aspects. But if you don't feel able to continue, thanks for your contribution.

Value Collector · 13 February 2015

SirRumpole said:
What local steel ?

.

Do you think Australia doesn't produce steel any more?

As I said such industries have been struggling for years.

Yes, and this Tax you suggest would not help them

If we want a steel industry it would be better off being government owned on a national basis. We don't have the market for a lot of small operations

The market is bigger now than it was in the 50's when the local steel industry was in its golden years.

and we have many speciality small steel producers, In an industrial estate where my father worked there is a guy that makes specially steel products, using custom blends, he has a mini arc furnace, there would be guys like that around Australia, his margins would be very tight already.

Value Collector · 13 February 2015

SirRumpole said:
The argument is not shifting, it just has a lot of aspects.

yes a lot of aspects, this tax would be overly complicated, with terrible side effects.

the current system is very simple and fair, you just don't seem to like the idea that a business gets a refund of the GST it's paid, even though there is a very good reason for this.

Should the GST be increased/widened?

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