Should the GST be increased/widened?

[noco]

New Zealand are thriving on 15 % GST and they in the black thanks to a conservative government.

 

[Macquack]

New Zealand are thriving on 15 % GST and they in the black thanks to a conservative government.

I would have thought you would be a proponent of small government, as in lower taxes.

Lower government expenditure and lower taxes?

 

[sptrawler]

It is probably the easiest, across the board tax increase, to sell.

 

[Macquack]

It is probably the easiest, across the board tax increase, to sell.

Not to me it is not.

Apart from the additional cost on the consumption side, as a sole trader, the GST is an effective income tax. Sptrawler, are you retired so this side of the equation does not effect you?

 

[SirRumpole]

It is probably the easiest, across the board tax increase, to sell.

Oh yeah, increasing the price of virtually everything for everyone really goes well with the consumers.

Selling a mining tax, or reduction of negative gearing concessions would be a lot easier , but the dodo's in government are governing for their mates not the country.

 

[Smurf1976]

It is probably the easiest, across the board tax increase, to sell.

From a purely political perspective I think that abolishing, or at least reducing to match actual road funding, petrol tax along with any increase in GST would increase popularity of the move.

Petrol excise often comes up as something people don't like, and if you exclude the various "sin" taxes (alcohol, cigarettes etc) then petrol is one of the very few things where the present tax rate is far higher than the rate of GST applied. At present, the overall tax on petrol is close to a third of the retail price.

I'm not arguing that it is or isn't good policy, just thinking in terms of something that would gain support of the masses and petrol immediately comes to mind there.

 

[noco]

Oh yeah, increasing the price of virtually everything for everyone really goes well with the consumers.

Selling a mining tax, or reduction of negative gearing concessions would be a lot easier , but the dodo's in government are governing for their mates not the country.

You cannot make the poor richer by making the rich poorer......That is what socialism is all about.

 

[Macquack]

You cannot make the poor richer by making the rich poorer......That is what socialism is all about.

You have got it all wrong.

Yes, you can make the poor richer by making the rich poorer.

And, No, that is not what socialism is all about.

Noco, you continue to frustrate and bore me.

Tell me you genius solution for public roads will ya?

Or don't you leave your "private" estate?

 

[luutzu]

Oh yeah, increasing the price of virtually everything for everyone really goes well with the consumers.

Selling a mining tax, or reduction of negative gearing concessions would be a lot easier , but the dodo's in government are governing for their mates not the country.

That's what mates are for

 

[luutzu]

You cannot make the poor richer by making the rich poorer......That is what socialism is all about.

Turns out you can't make the poor richer by making the rich richer either.

So what to do?

Ah well, just make the rich richer and they might buy a few street art or make some large tax-deductible donation to some shelter or something.

 

[sptrawler]

Not to me it is not.

Apart from the additional cost on the consumption side, as a sole trader, the GST is an effective income tax. Sptrawler, are you retired so this side of the equation does not effect you?

I am retired, and on a fixed income, from whatever my investments make. Therefore an increase in GST would have a marked effect on my lifestyle and disposable income.

If you are a sole trader you must be making money, or you are in the wrong business. If the goods or services you provide are required, an increase of 5%, applies to all your competitors, so the net cost to you should be negligible.

The reason I said it made sense, was it is easily applied and would put an immediate brake on the spiralling deficit. It could be implemented immediately and then be reviewed, with the overall review of the tax base.

Pandering to all and sundry, just allows the enormity of the problem, to compound.

Nobody seems to worry about that.

 

[sptrawler]

Oh yeah, increasing the price of virtually everything for everyone really goes well with the consumers.

That's going to happen anyway, just a drop in the value of the Aus$ will do that.

At least with the gst, everyone pays it, doesn't matter who you are.
If you buy a 200 series Land Cruiser for $120,000 you pay $18,000, if you buy a Mitsubishi Mirage, you pay $1,500.
Currently the difference is $12,000 as opposed to $1,000.

Selling a mining tax, or reduction of negative gearing concessions would be a lot easier , but the dodo's in government are governing for their mates not the country.

The mining tax was dumb, it was focused at a sector of the economy that had high risk, high upfront costs.
The immaturity of the tax is highlighted right now, who would invest in the mining sector? If there was a tax sitting there to smack you if they struck it rich.
What is different between a mining super profits tax, or a banking super profits tax, or a high tech super profits tax? Why single out mining, if it is regarding the removal of a non renewable resource, it should have focused on tonnage not profits.IMO

With negative gearing, I don't agree with it, however it would be scary if a change to it caused a collapse in the building sector. It will happen, but it won't happen while building is propping up the economy.IMO

It would be nice if all the required changes could be carried out, at a definitive point in time, but that doesn't happen.
A huge shift of our tax base will be required, IMO it will be painfull, but it will happen whether people like it or not.
The broader you spread the load, the less it effects those at the bottom. The GST does that.IMO many other taxes need adjusting and implementing, but gst is the easiest.

 

[luutzu]

That's going to happen anyway, just a drop in the value of the Aus$ will do that.

At least with the gst, everyone pays it, doesn't matter who you are.
If you buy a 200 series Land Cruiser for $120,000 you pay $18,000, if you buy a Mitsubishi Mirage, you pay $1,500.
Currently the difference is $12,000 as opposed to $1,000.

The mining tax was dumb, it was focused at a sector of the economy that had high risk, high upfront costs.
The immaturity of the tax is highlighted right now, who would invest in the mining sector? If there was a tax sitting there to smack you if they struck it rich.
What is different between a mining super profits tax, or a banking super profits tax, or a high tech super profits tax? Why single out mining, if it is regarding the removal of a non renewable resource, it should have focused on tonnage not profits.IMO

With negative gearing, I don't agree with it, however it would be scary if a change to it caused a collapse in the building sector. It will happen, but it won't happen while building is propping up the economy.IMO

It would be nice if all the required changes could be carried out, at a definitive point in time, but that doesn't happen.
A huge shift of our tax base will be required, IMO it will be painfull, but it will happen whether people like it or not.
The broader you spread the load, the less it effects those at the bottom. The GST does that.IMO many other taxes need adjusting and implementing, but gst is the easiest.

Any tax on consumption will always disadvantage the poor and average people more than the rich.

It might seem like a fair tax since it's across the board, but the poor will lose out and even the gov't admit that with all the talk of those earning less than $100K will actually benefit through rebates or whatever.



Say you have two family, one average and one earning a few times above that.

All else being equal, they both spend similar amount on goods and services as necessity. But the average or poor family will have very little disposal income after all necessity while the richer family will likely have a lot more savings, and with those savings they invest or go overseas and spend.

So already you are increasing the tax on a large portion of the poorer family's income while the rich and richer's proportional share of the burden isn't... proportional.

Fairness aside, it's poor economic policy because a tax on consumption will mean less consumption, mean less demand, less jobs... which leads back to loss jobs and still less demand.


If the gov't is concern about economic decay and revenue issue, invest more. Failing that, stimulate demand from the bottom.

If class warfare is to take place, take it to the rich. They can better afford it, and what's more, it will lead to less speculation in financial assets and with increase demand they might actually see the economics in investing in real jobs and less speculation in global financial assets.

 

[sptrawler]

Any tax on consumption will always disadvantage the poor and average people more than the rich.

It might seem like a fair tax since it's across the board, but the poor will lose out and even the gov't admit that with all the talk of those earning less than $100K will actually benefit through rebates or whatever.



Say you have two family, one average and one earning a few times above that.

All else being equal, they both spend similar amount on goods and services as necessity. But the average or poor family will have very little disposal income after all necessity while the richer family will likely have a lot more savings, and with those savings they invest or go overseas and spend.

So already you are increasing the tax on a large portion of the poorer family's income while the rich and richer's proportional share of the burden isn't... proportional.

Fairness aside, it's poor economic policy because a tax on consumption will mean less consumption, mean less demand, less jobs... which leads back to loss jobs and still less demand.


If the gov't is concern about economic decay and revenue issue, invest more. Failing that, stimulate demand from the bottom.

If class warfare is to take place, take it to the rich. They can better afford it, and what's more, it will lead to less speculation in financial assets and with increase demand they might actually see the economics in investing in real jobs and less speculation in global financial assets.

That is all a bit misleading,IMO

Those who have plenty of money, won't reduce their consumption.

Those on low incomes can be compensated and the tax doesn't apply to basic food items. Unfortunately it does apply to junk food, cigarettes and alcohol.

Also, to say the poor and rich spend similar amounts on goods and services, is ridiculous.IMO

I have well off friends and poor friends, I know who is spending the most on goods and services.

The other way, is as you say "take it to the rich". When I started work, the top tax rate was 60%, that cut in at about $60,000 from memory.

Allowing for inflation, let's reintroduce it at about $250,000, sounds good to me.
Or maybe, make the first $40,000 tax free then a flat 35% above that.lol That would look after the poor.
You just have to work out what makes you look good to the poor, without affecting you.lol

 

[sptrawler]

You cannot make the poor richer by making the rich poorer......That is what socialism is all about.

And when everyone ends up poor, what do you do then?

Like the old saying goes" you can't bring someone up to your level, who doesn't want to change, you end up at their level".

 

[luutzu]

That is all a bit misleading,IMO

Those who have plenty of money, won't reduce their consumption.

Those on low incomes can be compensated and the tax doesn't apply to basic food items.

Also, to say the poor and rich spend similar amounts on goods and services, is ridiculous.IMO

I have well off friends and poor friends, I know who is spending the most on goods and services.

The other way, is as you say "take it to the rich". When I started work, the top tax rate was 60%, that cut in at about $60,000 from memory.

Allowing for inflation, let's reintroduce it at about $250,000, sounds good to me.
Or maybe, make the first $40,000 tax free then a flat 35% above that.lol That would look after the poor.
You just have to work out what makes you look good to the poor, without affecting you.lol

Rebates and compensation can, and will, be remove. You can bet the tax will stick around though.

I know poor people and some of them spend as much as the rich

I know, I was simplifying for illustrative purposes. Key word is proportional.

Let say I'm rich (nice to imagine that way sometime) and say you're the average Aussie battler earning $50K a year against my $200k.

The rent, power, phone, food and other bare necessity of life costs your family $40k, leaving you $10 in savings.

My imaginary self have more so my necessities costs $80k, leaving me $120k.

In proportion to my income, I am already taxed less than you. So we're not paying the same share of tax even though I spent twice as you. And with the $120, I could invest in stocks or bonds and will only be taxed at half if i ever realised capital gain.. get myself a good accountant and good thing might also happen with that too.

Your $10k at the bank will earn some interest and taxed at your income rate; if there's emergency and you need to spend it it'll be taxed at GST too.


If, say, capital gains tax are remove and income from investments are the same as income... it's fairer and the poor won't be hit so hard and bear most of the burden.

----

Have probably said it before but let's repeat...

In the US after WW2 until at least the 1970s... tax on corporation and the millionaires were in the 90s; wages were fair (high?) and they enjoyed the greatest period of economic growth and equality ever in the history of the world - this even though there's segregation and all that.

Reduction in corporate tax and on high income earners haven't made it better since 1980s.

I'm no accountant but the little I do know here and there, you have got to admire how the game is being played.

 

[sptrawler]

Rebates and compensation can, and will, be remove. You can bet the tax will stick around though.

I know poor people and some of them spend as much as the rich

I know, I was simplifying for illustrative purposes. Key word is proportional.

Let say I'm rich (nice to imagine that way sometime) and say you're the average Aussie battler earning $50K a year against my $200k.

The rent, power, phone, food and other bare necessity of life costs your family $40k, leaving you $10 in savings.

My imaginary self have more so my necessities costs $80k, leaving me $120k.

In proportion to my income, I am already taxed less than you. So we're not paying the same share of tax even though I spent twice as you. And with the $120, I could invest in stocks or bonds and will only be taxed at half if i ever realised capital gain.. get myself a good accountant and good thing might also happen with that too.

Your $10k at the bank will earn some interest and taxed at your income rate; if there's emergency and you need to spend it it'll be taxed at GST too.


If, say, capital gains tax are remove and income from investments are the same as income... it's fairer and the poor won't be hit so hard and bear most of the burden.

----

Have probably said it before but let's repeat...

In the US after WW2 until at least the 1970s... tax on corporation and the millionaires were in the 90s; wages were fair (high?) and they enjoyed the greatest period of economic growth and equality ever in the history of the world - this even though there's segregation and all that.

Reduction in corporate tax and on high income earners haven't made it better since 1980s.

I'm no accountant but the little I do know here and there, you have got to admire how the game is being played.

I suppose the underlying problem, that you aren't mentioning is, if you are on $50k/ annum you aren't paying any tax anyway, when you include concessions.

Also the imaginary self on $200k will be paying probably approx $60k tax. So he really is on $140k, also has to pay $2k medicare and probably $6k private health. No concessions on school fees or anything else.

What you really want is the person on $200k to pay $100k in tax, and the person on $50k to get an extra $50k in handouts.

Why wouldn't the person with the hassle of a $200k/annum job, just chuck it in and drive the council side loader, for $70k/annum?

You can strip out incentive, but then everyone ends at the lowest common denominator.

I know the ceo's of companies are on obscene money, and it should be stopped.

But plebs who work up to $150-200k/ annum jobs, won't be getting the money for nothing.IMO

 

[sptrawler]

Sorry Iuutzu, I'm wrong.

Your imaginary self on $200,000/ year doesn't pay $60,000, he pays $67,547 including medicare then ad $6,000 for private health.

Let's just round it off at $70,000, so instead of $200,000, you actually have $130,000.

Doesn't sound any ware near as romantic, as your example.

So, how much more do you want to take of him, and give to the person on $50k who isn't paying any tax?

 

[qldfrog]

what is missing is that if you are rich, yopu do not pay income tax;
so if on 200 a year your accountant come and help, and you invest in neg geared property then get a nice refund;
GST is on any real computation the fairer tax (but not if you actually believe taxation is working: the fact is it is not)
I am also in the camp where i do not work if taxed above 50%; I can afford it so i do it; with a great life balance and a poorer ATO as a result.The more I look, the more such people i know;
even at current rates, taxation on work income is disproportionally high in this country, and high rates start way too low
Go for GSt increase anyday, at least i wioll not subsidised a RE bubble and the killing of innovation

 

[Tisme]

I don't really know what the rich have to do with the GST, it was always a way to redistribute excess middle class wealth. The 2% top money makers increase assets and live off company expenditures which is generally shareholder money and attracts a much higher FBT income to the govt than income tax would.

Simplistic assumptions that you can make the wealthy class poor doesn't even hold up in communist countries, which seem to have vast numbers of oligarchs.

It's been posted here by others that there doesn't seem to be a budget emergency anymore and the current govt hasn't been slow in doubling the net debt after slamming the previous govt.

The "infrastructure" reign of Tony Abbott is a fizzog with no great halo projects, just cynical promises of funding that requires the states (i.e. us) to go further into debt or suffer the wedge politics the promises are designed to create.

Increasing the GST will only create incipient spend and debt. It's been a party since Bob Hawke reworked the economy and there is a generation of mini entrepreneurs who don't know the meaning of hand to mouth, let alone zero personal debt, so if the unlikely does happen and 15% GST reduces net public debt, personal debt will increase to pay for sustained lifestyles.