Should the GST be raised?

[Julia]

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.

 

[Mike Trader]

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.

 

[Stan 101]

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 :

 

[Julia]

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

 

[drsmith]

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

 

[qldfrog]

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

 

[McLovin]

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.

 

[Knobby22]

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

 

[drsmith]

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.

 

[tinhat]

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).

 

[drsmith]

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.

 

[McLovin]

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.”

 

[drsmith]

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.

Carina was not the only welfare recipient to fuel the sense that Denmark’s system has somehow gotten out of kilter. Robert Nielsen, 45, made headlines last September when he was interviewed on television, admitting that he had basically been on welfare since 2001.

Mr. Nielsen said he was able-bodied but had no intention of taking a demeaning job, like working at a fast-food restaurant. He made do quite well on welfare, he said. He even owns his own co-op apartment.

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

 

[McLovin]

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."

 

[FlyingFox]

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...

 

[FlyingFox]

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

 

[sptrawler]

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?

 

[sptrawler]

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.

 

[McLovin]

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).

 

[sptrawler]

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