Should the GST be increased/widened?

[drsmith]

Some broad numbers,

Australia raises $56 billion from the GST. If it boosted the rate to 15 per cent it could raise $80 billion.

The department is also worried about the growing importance of spending on items not subject to the GST such as health and education and goods sold online. It says the proportion of sales covered by the GST has slipped from 56 to 47 per cent in the past 10 years.

If the GST was broadened to all sales without changing the rate, it would raise $119bn on those numbers.

http://www.smh.com.au/federal-polit...more-gst-less-income-tax-20150329-1maeco.html

The ABC also has a piece on the above discussion paper including the current complexities of GST on pizza rolls,

The ATO has advised that determining whether a pizza roll is taxable requires consideration of the depth of any filling or topping, the recipe for the dough and whether the roll can be cut, have additional filling added or is expected to be served as is.

http://www.abc.net.au/news/2015-03-30/government-paper-questions-gst-rates-exemptions/6357110

 

[noco]

Some broad numbers,



If the GST was broadened to all sales without changing the rate, it would raise $119bn on those numbers.

http://www.smh.com.au/federal-polit...more-gst-less-income-tax-20150329-1maeco.html

The ABC also has a piece on the above discussion paper including the current complexities of GST on pizza rolls,



http://www.abc.net.au/news/2015-03-30/government-paper-questions-gst-rates-exemptions/6357110

Doc, I would be delighted to view the Treasury models requested by the Labor Party......Not likely though as Labor would keep that a deep dark secret...Labor tried to keep it a secret that they had even considered any alterations to the GST.

 

[sptrawler]

Some broad numbers,



If the GST was broadened to all sales without changing the rate, it would raise $119bn on those numbers.

http://www.smh.com.au/federal-polit...more-gst-less-income-tax-20150329-1maeco.html

The ABC also has a piece on the above discussion paper including the current complexities of GST on pizza rolls,



http://www.abc.net.au/news/2015-03-30/government-paper-questions-gst-rates-exemptions/6357110

Well Chris Bowen on 7.30 said there is no way Labor will touch it, the gst is set in stone.

Sounds like a Tony Abbott, bite you in the ar$e statement to me.
Isn't it all so predictable, " Chris you said on my t.v show blah, blah, blah" . Makes me sick the predictabilty of it.

 

[noco]

Well Chris Bowen on 7.30 said there is no way Labor will touch it, the gst is set in stone.

Sounds like a Tony Abbott, bite you in the ar$e statement to me.
Isn't it all so predictable, " Chris you said on my t.v show blah, blah, blah" . Makes me sick the predictabilty of it.

I heard that an increase in the GST to 15% would bring in an extra $80 billion, so the argument of how it will affect aged pensioners could be compensated with a percentage increase......Would you say $1billion could be used for the compensation of the extra GST that pensioners would have to pay.

One way of taking from those who can afford it and giving to those who cannot.

Whilst all the states and territories and the federal government have to agree to any change in the GST, I believe it will come to a stage where even the Labor states, who are being starved of money, will eventually have to come to the party.

Why did the previous Labor government do some modelling of the GST if they were not thinking of some changes.....There seems to be some hypocrisy here.

 

[Hodgie]

I heard that an increase in the GST to 15% would bring in an extra $80 billion

They estimated that if they raised the GST to 15% it would bring in a total of $80 Billion. Which is a $24 Billion increase from previous figures of $56 Billion.

 

[noco]

They estimated that if they raised the GST to 15% it would bring in a total of $80 Billion. Which is a $24 Billion increase from previous figures of $56 Billion.

Yes...correction...you are right, but nevertheless there is still room there to compensate the less well off.

 

[Craton]

My bet is that GST will broaden, rise or both.
Seems to be the most simplest and quickest way to raise govt. revenue.

Bowen's statement is the exact opposite of Labors intention. He's no a very good liar...

 

[Logique]

GST increase has a certain inevitability if the Coalition is returned next time, they might even run on it.

Ring-fencing fresh food is probably the best compensation measure - since it's not just pensioners that will suffer, what about all those people on basic wage (or less), and mightn't currently be required to pay tax.

 

[Craton]

GST increase has a certain inevitability if the Coalition is returned next time, they might even run on it.

Ring-fencing fresh food is probably the best compensation measure - since it's not just pensioners that will suffer, what about all those people on basic wage (or less), and mightn't currently be required to pay tax.

I understand the fresh food argument but the fact is that food is a good and a service is required to provide if for consumption.
I also understand that the poorest will suffer (don't they always?) so why not use an "exception card"?
Pensioners could use their pension card for example. Yes, I understand that this can lead to misuse and abuse but with biometrics or simple photo ID, this can be negated.

Oh, and no I'm not for raising the GST but I'm also a realist.

 

[Knobby22]

We don't need to raise the GST. Where it is higher in Europe the blackmarket thrives. look at Greece and Spain.
Possibly it could be widened slightly.

The additional money could be easily obtained through getting rid of some of the tax lurks to do with Super and property which everyone from David Murray down to people on this site have mentioned.

There could be a modification of the GST to target multinationals who are avoiding income tax in this country.
It could be that if you are a company that pays less than 10% tax due to tax arrangements then you would be directly liable for GST. I am sure some policy wonk could work out a good method.

 

[drsmith]

Rising the GST rate to 15% would raise $24bn according to the Fairfax numbers above but it remains the case that doing this does nothing for simplifying the tax nor addressing its diminishing base as a proportion of sales which impacts its long term growth as a proportion of the economy. The latter in particular will see us constantly coming back to review the rate.

Broadening the base however will raise $63bn on those same numbers, simplify the tax and better maintain it as a proportion of the economy. This will reduce the future need to review the rate. Whether we change the base or rate, changes elsewhere in tax/transfer will still be argued to address its regressive nature. Increasing the rate is therefore not fundamentally advantageous over broadening the base on this specific point with the only distinction being the extent of change required elsewhere in tax transfer.

It remains the case that increasing the rate is just a tax increase and not tax reform.

 

[Knobby22]

Good points. Also note that the figures show that raising the rate by 50% does not result in a 50% increase in revenue. Obviously due to the expectation of increased tax avoidance.

 

[bellenuit]

Good points. Also note that the figures show that raising the rate by 50% does not result in a 50% increase in revenue. Obviously due to the expectation of increased tax avoidance.

How do you avoid GST? I thought one of the main benefits of GST vs income tax is that the black economy can avoid the latter, but not GST.

Could the non corresponding increase in revenue be simply because people will buy less when prices rise due to increased GST?

 

[Knobby22]

How do you avoid GST? I thought one of the main benefits of GST vs income tax is that the black economy can avoid the latter, but not GST.

Could the non corresponding increase in revenue be simply because people will buy less when prices rise due to increased GST?

You know those businesses that will only accept cash? Classic example.
if you use a tradesperson, they might let you pay part of it in cash and give you some of the GST money.
If the rate rises there will be more incentive to do so.

 

[noco]

Some interesting facts of GST/VAT around the world which ranges from 5% to 27%.


http://en.wikipedia.org/wiki/Value-added_tax

 

[drsmith]

SA premier Jay Weatherill would prefer to bring back state taxes such as financial institutions duty in preference to changing the GST.

http://www.abc.net.au/news/2015-04-14/gst-rate-jay-weatherill-state-taxes/6390696?section=sa

No doubt he's been inspired by the federal government plans for their own deposits tax.

 

[drsmith]

Tax talk seems to have started up again ahead of this week's state/federal leaders retreat.

The early signs are not good as the states are simply lining up to increase the overall tax take without so much as a sniff on reform.

NSW premier Mike Baird wants to raise the GST to 15% without broadening the base and SA Premier Jay Wetherill's alternative is to raise income taxes through an increase in the Medicare levy. Both are nothing more than tax increases along the respective party lines of regressivity and progressivity.

It can only go uphill from here, hopefully.

 

[pixel]

Tax talk seems to have started up again ahead of this week's state/federal leaders retreat.

The early signs are not good as the states are simply lining up to increase the overall tax take without so much as a sniff on reform.

NSW premier Mike Baird wants to raise the GST to 15% without broadening the base and SA Premier Jay Wetherill's alternative is to raise income taxes through an increase in the Medicare levy. Both are nothing more than tax increases along the respective party lines of regressivity and progressivity.

It can only go uphill from here, hopefully.

Yeah: Hit the lowest-paid workers and Pensioners hardest! There's so many of them, yet they can't afford to lobby for a fair go. Our Politicians are a disgrace!

 

[luutzu]

Yeah: Hit the lowest-paid workers and Pensioners hardest! There's so many of them, yet they can't afford to lobby for a fair go. Our Politicians are a disgrace!

Nothing stimulate demand more than a tax on consumption. It also help you get re-elected too.

 

[Tisme]

Why would it cost $2bn to implement GST on overseas purchases? Are they going to make a whole new Ebay tax or something?

The value for customs is always peppercorn or "used" anyway ..... hmm maybe Australia Post could profit from the move by opening the parcels.