Ask RiotACT: So, the GST is Going to Increase...?

2604 said :

Look at all of the richest countries in the world – Luxembourg, Switzerland, Singapore, the Netherlands, Scandinavia – all of which are service economies and none of which has any mass manufacturing.

Actually, Germany and Sweden manage to build cars, and they even have aerospace industries.
Comparing Australia to Singapore or Luxembourg is pointless.

2604 said :

Also, our tax base is not “shrinking”. The government has never collected as much tax as it does now.

With the 6th-lowest taxing country in the OECD, I thought it was pretty well accepted that our budget problems were down to the lack of government income.

2604 said :

Tariffs hurt consumers…

Except we’ve established that Australians are very rich…

2604 said :

Even if all imported goods doubled in price overnight, they would nearly all still be much cheaper than their Australian made equivalents.

Assertion. Sounds unlikely, certainly not proven.

2604 said :

People’s standard of living would drop by a huge amount.

…except for all the additional income they’d be receiving, and all the additional government income to be spent on infrastructure and public services, and the reduction in Australia’s welfare and healthcare bills…

You’ve just made another unlikely-sounding assertion…

2604 said :

we aren’t good at manufacturing that stuff and overseas countries can do it cheaper. There used to be around half a dozen car manufacturers in Australia in the 1970s and the majority of cars sold was domestically manufactured, and yet Australians today are much, much wealthier in real terms, despite there being no notable car industry here today.

Australian wealth has been slipping in tandem with our failure to support our industries. The only reason we still appear “wealthy” is the massive influx of foreign money into our real estate market. (not to mention the now-popped resource-bubble.)

Retirees *not* owning their own home is set to double just over the next 10 years, and fall to 2% by 2050.
http://www.brisbanetimes.com.au/queensland/retirees-home-ownership-set-to-plummet-to-2-per-cent-20130821-2sbmu.html

That’s a warning sign of a nation whose economy is in crisis from being stripped bare by dodgy “free trade” deals.

2604 said :

Australia also has one of the highest corporate tax rates in the OECD.

You say that like you almost believe it.
http://taxreview.treasury.gov.au/content/Paper.aspx?doc=html/publications/papers/report/section_5-07.htm
Our corporate tax rate is the same as Germany’s, and less than France and the US.
And yet all three of those countries manage to manufacture cars and to foster an aerospace industry.

The answer to Corporations ripping us off is not to surrender to them, but to assert a bit of leadership and make them pay their fair share of taxes.

JCitizen, it is possible to make anonymous calls to Centrelink and CrimeStoppers to report genuine concerns
http://www.humanservices.gov.au/customer/information/fraud-and-security
http://www.afp.gov.au/contact/crime-stoppers

what appears an almost certain increase in the GST from 10% to 15%

almost certain, is it? i thought everything was still on the table; and that there is an election due before any such measures passed through the parliament. do you know something we don’t?

No_Nose said :

watto23 said :

dungfungus said :

…..

I think you are turning a blind eye to suit your argument here..

Dungers turning a blind eye to suit his own arguement?

Never!

I second that.

Until politicians take responsibility for wasting tax payers hard earned money,eg;

1. the $400,000 dollar “big owl” in Belconnen , that has had several hundred thousand spent on it since its purchase to “maintain it”.
The” twisted metal junk art” near Mitchel , the “rabid sheep” in Kambah etc, etc.

2. the handing of the Disability Pension to those with supposed “mental Health issues”, with no checks or balances in place to make sure that they are not spending “their pay” on drugs, alcohol, gambling or black market enterprises, all of which has created their “Mental Illness” in the first place.
I know of at least 8 people , in Canberra alone, that boast on a daily basis, on how they are “much better off” to get the “pension” than go to work. It supports their ability to get “smashed” by 9am, which they could not do if they had to go to work, which they are quite capable of doing……??? And the ones who have used their pension to set them up with with the ability to purchase small and large scale “grow rooms”, both in Public Housing and privately rented dwellings, resulting in Drug Manufacturing capabilities and networks, right throughout the A.C.T.,which is costing Taxpayers an absolute fortune…..??

3. The public servants that think that because they are public servants, they are entitled to STILL “rort the system” in anyway they can. And because they are receiving such high incomes for what they actually do and for the level of public service they actually provide, neither of which is in inline with the private sector or broader public, seems to give them a false sense of importance and entitlement.
Put simply, if they were in the private sector, running their “enterprises”, they way that they do, they would go broke. Just like the Government is…..????

There are many examples of how the “system” is failing the “ordinary” taxpaying people of this country, that i would get timed out if I mention any more.

The synopsis of this discussion should be about “tightening the leaky boat” rather than overloading it.
In My Opinion…….
JCitizen..

miz said :

However I am not a fan of the GST because it is unfair to those who have no choice but to spend all their money on goods and services. There are many loopholes that can be closed first before having to resort to increasing the GST, which is simply lazy. We’ve had a tax review – let’s implement it.

Yep – it certainly is a lazy solution. Look at the low rate of corporate tax paid by large companies that use those tax loopholes to legally pay less tax. Yes – those are harder to close.

And where is the Henry Review at now ? last I heard, some headline recommendations had been agreed to by Government, but most are largely not implemented.

Yes – raising the GST is certainly the lazy solution – consumers and PAYG tax payers are sitting ducks.

miz said :

Germany has retained manufacturing, so we could follow that example. And There are plenty of things I never want to buy from OS – food is one of them. It’s madness to be so reliant on imports.

If the Euro collapses (a real possibility thanks to Merkel’s migration policies) Germany manufacturing sector will become uncompetitive with Spain and Italy overnight.

Germany has retained manufacturing, so we could follow that example. And There are plenty of things I never want to buy from OS – food is one of them. It’s madness to be so reliant on imports.

HenryBG said :

Yes, but what you’re forgetting is that with all the dodgy “free trade” agreements we’ve signed up to, we are being forced to allow into this country goods that have been produced in the absence of the regulatory framework that exists in this country and which is funded by our taxes – and so those foreign good are cheaper, and so nothing gets made here anymore, and so our tax base shrinks.

The reason “nothing gets made here anymore” is that Australia is moving towards being a service economy. Look at all of the richest countries in the world – Luxembourg, Switzerland, Singapore, the Netherlands, Scandinavia – all of which are service economies and none of which has any mass manufacturing. You can have high minimum wages or a large mass manufacturing sector, but not both. The “regulatory framework” that you talk of is what drives manufacturing jobs out of this country.

Also, our tax base is not “shrinking”. The government has never collected as much tax as it does now.

HenryBG said :

The GST is a significant tilt against the inequities involved in “free trade”. A GST of 100% would be excellent in that respect, and it would bring back a lot of economic activity to this country that has fled offshore.

Tariffs hurt consumers and do nothing to foster sustainable industry. Even if all imported goods doubled in price overnight, they would nearly all still be much cheaper than their Australian made equivalents. People’s standard of living would drop by a huge amount.

HenryBG said :

There is absolutely no excuse for a country of our size to have zero car manufacturing and for our defence budget to be constantly expended on foreign manufacture of weapons systems and platforms.

Yes there is – we aren’t good at manufacturing that stuff and overseas countries can do it cheaper. There used to be around half a dozen car manufacturers in Australia in the 1970s and the majority of cars sold was domestically manufactured, and yet Australians today are much, much wealthier in real terms, despite there being no notable car industry here today.

HenryBG said :

The small proportion of Australians that actually pays taxes is being fleeced by foreign manufacturers and foreign corporations who’ve structured their business to pay no tax here.

Actually, we’re being fleeced by politicians who have structured the tax system so that welfare recipients and wealthy retirees who own their own homes pay no tax here.

Australia also has one of the highest corporate tax rates in the OECD. Do you think any company would bother with tax minimisation if the company tax rate in Australia were 10% rather than 30%?

I hope we end up with a broad based tax that includes financial services for investments and that it is complimented with a flat rate of income tax made progressive by a larger tax free threshold. Unfortunately i doubt we will ever have the political climate conducive to any move toward a modern innovative system. Years of bandaids is the best we can hope for.

dungfungus said :

GST is not levied on goods and services that we export but is is on goods and services we import.
So, isn’t it better that we import everything?

No.

If domestic consumption shifts towards imported goods, then money is flowing overseas, and a GST is a way to stem that flow of money. A 100% GST would stem it quite well.

Exports are independent of imports – goods and services produced domestically for export will generate private revenue, income tax, payroll tax, company tax, etc…and not levying a GST on them makes them more saleable.

watto23 said :

dungfungus said :

…..

I think you are turning a blind eye to suit your argument here..

Dungers turning a blind eye to suit his own arguement?

Never!

HenryBG said :

watto23 said :

I’m all for getting rid of many items that are tax deductable and then reducing the taxation rates lower. Then apply the GST if we need to.

Yes, but what you’re forgetting is that with all the dodgy “free trade” agreements we’ve signed up to, we are being forced to allow into this country goods that have been produced in the absence of the regulatory framework that exists in this country and which is funded by our taxes – and so those foreign good are cheaper, and so nothing gets made here anymore, and so our tax base shrinks.

The GST is a significant tilt against the inequities involved in “free trade”. A GST of 100% would be excellent in that respect, and it would bring back a lot of economic activity to this country that has fled offshore.
There is absolutely no excuse for a country of our size to have zero car manufacturing and for our defence budget to be constantly expended on foreign manufacture of weapons systems and platforms.
The small proportion of Australians that actually pays taxes is being fleeced by foreign manufacturers and foreign corporations who’ve structured their business to pay no tax here.

We need politicians to show leadership on this – other nations aren’t embarrassed to ensure that spending of public monies is done for the National good, so nor should we.

GST is not levied on goods and services that we export but is is on goods and services we import.
So, isn’t it better that we import everything?

watto23 said :

I’m all for getting rid of many items that are tax deductable and then reducing the taxation rates lower. Then apply the GST if we need to.

Yes, but what you’re forgetting is that with all the dodgy “free trade” agreements we’ve signed up to, we are being forced to allow into this country goods that have been produced in the absence of the regulatory framework that exists in this country and which is funded by our taxes – and so those foreign good are cheaper, and so nothing gets made here anymore, and so our tax base shrinks.

The GST is a significant tilt against the inequities involved in “free trade”. A GST of 100% would be excellent in that respect, and it would bring back a lot of economic activity to this country that has fled offshore.
There is absolutely no excuse for a country of our size to have zero car manufacturing and for our defence budget to be constantly expended on foreign manufacture of weapons systems and platforms.
The small proportion of Australians that actually pays taxes is being fleeced by foreign manufacturers and foreign corporations who’ve structured their business to pay no tax here.

We need politicians to show leadership on this – other nations aren’t embarrassed to ensure that spending of public monies is done for the National good, so nor should we.

I cannot understand why people think everyone wants a ‘tax cut.’ I am glad to pay my fair share of tax and don’t mind if it goes up so long as the money is used to benefit the public good.
Eg, raise the Medicare levy and provide better health services.
However I am not a fan of the GST because it is unfair to those who have no choice but to spend all their money on goods and services. There are many loopholes that can be closed first before having to resort to increasing the GST, which is simply lazy. We’ve had a tax review – let’s implement it.

dungfungus said :

Good questions RD – the sort you never hear asked on the ABC or Fairfax Media.
When the GST was introduced there were sales taxes on goods that were abolished so the overall affect on goods was sort of “revenue neutral”. Cars became a lot cheaper though.
The “hit” came from the tax on services which hadn’t existed before. This was supposed to wipe out the “cash economy”. Nice try, but it hasn’t worked.
Increasing the GST to 15% will only increase prices existing taxable items by 4.55% so I can’t see the need for any compensation to anybody, especially the ones that whinged about being asked to pay a $5 co-payment to see a doctor or get an X-Ray.
I think it would be better to first have GST applied to everything (as it was designed to do in the first place) and at the same time abolish all the state taxes that were supposed to go when it was introduced.
Then increase the rate in a few years time.

I think you are turning a blind eye to suit your argument here. I believe you’ll find ABC and Fairfax do ask many of these types of questions and its the fact that the GST is a bandaid to the bigger problem of the government taxation system.

I agree that with point 1, if someone has say $500 of disposable income if the GST rises then businesses are going to get less of that disposable income and small businesses are often run on thinner margins just to compete.

I’m not a fan of compensation either. That just means the system isn’t working properly. We could actually have much lower overall tax rates if we got rid of a lot of the tax deductions that people can claim for. If you study and its related to your work its tax deductable, but if you are trying to improve your skills and get a better job its not tax deductable. If you buy and rent a whole house out it all tax deductable, but rent a room out and help provide cheaper more affordable accomodation and the tax laws are much much less favourable. I’m all for getting rid of many items that are tax deductable and then reducing the taxation rates lower. Then apply the GST if we need to.

3 and 4, I agree that the state governments are very good at wasting money. the tram is not the real issue in Canberra, its the 56% of our budget ($2.6 billion) that goes on health and education that can’t deliver good results. We spend more on those every year than the tram will cost to build twice over many years. There are many many reasons why and the health system in general has been pushed in the wrong direction especially with the private health insurance policies pressuring people into paying for the policy, but unable to afford to use them.

The land based tax system the ACT government is moving too has been recognised as the correct way to go, by many economists and treasurers including liberal ones. In fact many have said it took a lot of guts to do it politically because it makes them an easy target. I’ll be curious to see if Hanson persues this path, especially given the federal liberals have said the ACT policy is a step in the right direction and more states should be doing it. Stamp duties are ineffective taxes. There is no double dipping going on its a transition period. Also what the ACT liberals failed to state was that under them rates would still rise to cover costs, not by as much, but still by enough. They have no solution on how to pay for things and its not a valid solution to say lets not build anything, because ultimately then the economy suffers, the residents standard of living drops significantly and the place becomes an awful place to live. So simple arguments like not building the tram is not going to suddenly lower rates and make everything great.

Yes its the old slippery slope argument with the GST and I agree raising it by 15% because politically the government are too weak to tackle the real issues with the tax system just leads to more of the same and then raising it to 20%. The same argument was valid with the medicare co-payments. That was just going to keep increasing because fixing the problems are actually too hard politically and no one has the guts to make the changes needed and risk losing power.

1) Yes, partly. Although this depends on the price elasticity of the product. It’s factored into projected revenue.

2) Only low income earners/welfare recipients will be compensated. The total compensation will be far less than the increased revenue.

3) It’s not certain that the extra GST would be used for any particular purpose but the Federal government does have scope to reduce payments to the states (or growth in payments) in other areas to fund changes that they wish to make on a Federal level.

4) A politician might be a hypocrite? Shock me.

5) The original proposal for the GST included a number of state taxes that were to be removed including a number of different stamp duties (it didn’t include stamp duty on residential property if that’s where you are going). As part of the deal with the Democrats and the shrinking of the GST base, Howard and Costello took out a number of these taxes that were to be removed.

Good questions RD – the sort you never hear asked on the ABC or Fairfax Media.
When the GST was introduced there were sales taxes on goods that were abolished so the overall affect on goods was sort of “revenue neutral”. Cars became a lot cheaper though.
The “hit” came from the tax on services which hadn’t existed before. This was supposed to wipe out the “cash economy”. Nice try, but it hasn’t worked.
Increasing the GST to 15% will only increase prices existing taxable items by 4.55% so I can’t see the need for any compensation to anybody, especially the ones that whinged about being asked to pay a $5 co-payment to see a doctor or get an X-Ray.
I think it would be better to first have GST applied to everything (as it was designed to do in the first place) and at the same time abolish all the state taxes that were supposed to go when it was introduced.
Then increase the rate in a few years time.