Scrap the GST and save $50 billion

[smk762]

http://switzer.com.au/the-experts/david-bassanese/get-rid-of-the-gst-and-save-50-billion/

I'm up for abolishing the GST and replacing it with a much simpler tax to administer, levied on the largest known tax base in the country. And because the tax base is so huge, the tax rate can be quite small and hardly noticeable in most cases.
Which tax base? Electronic transactions which are only set to grow as we move inexorably toward a cashless economy.

According to the Australian Payments Clearing Association, in the 12 months to June 2014, Australian business and consumer collectively made 17 billion non-cash payments, worth a total of $100 trillion or 66 times the value of annual nominal gross domestic product (of around $1.5 trillion).
Imagine a tax rate of 0.025% levied on either side of these transactions such that both payer and payee would be charged a mere 0.0125% each. That would equate to a charge of 1.25c for each $100 household shopping transaction (the shop would also pay 1.25c). On a $500,000 home sale, each side would pay $62 in electronic transactions tax.

Buy here's the kicker: a tax rate of that magnitude would raise around $250 billion in revenue or five times the $50 billion raised from the cumbersome GST. In fact, with such a tax we could abolish the $50 billion GST, the $70 billion company tax haul, and half of the $163 billion take from personal income taxes - and still have around $50 billion in remaining revenue (worth around 3% of GDP) to more than plug the remaining budget deficit gap.

Such a tax would also be progressive or at least not regressive - in that all would pay the same flat tax rate on transactions, meaning higher income households (with higher value transactions) would pay more in total.
Imagine a country where small business did not have to worry about a complex quarterly BAS statement, and where no business need worry about company income tax at all?

Yeah yeah, I know, get rid of all tax, governments etc etc. Well until that happens, the least the bastards could do is stop wasting our time with having to itemise and report it.

 

[dollars]

I believe Pauline Hansen (one nation) also suggested a similar scheme

 

[willrocks]

I believe Pauline Hansen (one nation) also suggested a similar scheme

And look what happened to her.

 

[phrenzy]

taxing the flow of money doesn't sit right with me. A consumption tax is fair if it avoids the basics. That way they don't tax productivity since you can make as much money as you like and don't pay any tax until you start spending it on "stuff".

There are heaps of situations where electronic transfers aren't related to actual economic activity. The statistics prove that, 66 times GDP? A lot of it is obviously just people moving money around.

Watch out if it looks like it's coming in. They're already trying to lock down cash transactions, if you can dodge tax by paying cash you can bet we'll be losing the $50 and $100 notes like they were discussing and any number of other"incentives" to move people away from cash/bitcoin/PM.

 

[JulieW]

News just in, Netflix will not charge GST to local subscribers because service is provided from outside Australia!

 

[Lovey80]

Has anyone done some more digging into this? The idea seems simple and fair enough, anything that gets rid of progressive tax rates and personal income tax has been wanting to know more. What's the catch?

 

[sammysilver]

Has anyone done some more digging into this? The idea seems simple and fair enough, anything that gets rid of progressive tax rates and personal income tax has been wanting to know more. What's the catch?

The catch is that they may make cash illegal.

 

[Lovey80]

Has anyone done some more digging into this? The idea seems simple and fair enough, anything that gets rid of progressive tax rates and personal income tax has been wanting to know more. What's the catch?

The catch is that they may make cash illegal.

Ok a pretty big catch, but no one is doing massive dodgy deals in cash anyway these days unless you're a drug dealer.......so for a huge portion of the population who deal in cash to save a bit here and there because of the tax burden is so high, why would they bother if they have no income tax.

Sure the tiny transaction taxes add up over time but unless you're a high freq trader I'm not seeing a down side.

Hawkeye? Bordsilver? shiney? Tell me why this sucks because I've been busy over the last 8 months and haven't been following ya'll. I only just had a little tear 5 minutes ago finding out about poor Maggie.

 

[SpacePete]

Has anyone done some more digging into this? The idea seems simple and fair enough, anything that gets rid of progressive tax rates and personal income tax has been wanting to know more. What's the catch?

The catch is that they may make cash illegal.

Ok a pretty big catch, but no one is doing massive dodgy deals in cash anyway these days unless you're a drug dealer.......

There's a HUGE cash market in services here. Haven't you ever been offered a different price from a tradie for cash payment?

 

[willrocks]

There's a HUGE cash market in services here. Haven't you ever been offered a different price from a tradie for cash payment?

One of my nieces applied for a part-time job a at a Thai restaurant. When she was offered the job they said "You want cash. Or you wanna pay tax!"

 

[JulieW]

Timely

It is crucial that all these snake-oil salesmen get exposed as the malevolent alchemists they are.

First, the Treasury says that of the 33 developed countries that have taxes similar to the GST, only 3 charge less than Australia. So what? How about Treasury tells everyone what the entire tax packages of these 33 countries have. None of them charge less death duty or inheritance tax than Australia.

Next, Hockey heralds "the start of a conversation about how we bring a tax system built before the 1950s into the new century". Neocon fairy floss. Of course such a system will never contemplate what has actually changed the globalisation of capital and its interplay with taxhavens, sucking revenue like vampires from the blood supply of our governments.

Hockey solemnly intones that Australia's heavy reliance on income taxes might be unsustainable because of the digital economy and globalisation. Why? Joe? Because citizens might mimic the attitude of business toward tax, ie optional?


http://www.ellistabletalk.com/

 

[Shaddam IV]

Timely

It is crucial that all these snake-oil salesmen get exposed as the malevolent alchemists they are.

First, the Treasury says that of the 33 developed countries that have taxes similar to the GST, only 3 charge less than Australia. So what? How about Treasury tells everyone what the entire tax packages of these 33 countries have. None of them charge less death duty or inheritance tax than Australia.

Next, Hockey heralds "the start of a conversation about how we bring a tax system built before the 1950s into the new century". Neocon fairy floss. Of course such a system will never contemplate what has actually changed the globalisation of capital and its interplay with taxhavens, sucking revenue like vampires from the blood supply of our governments.

Hockey solemnly intones that Australia's heavy reliance on income taxes might be unsustainable because of the digital economy and globalisation. Why? Joe? Because citizens might mimic the attitude of business toward tax, ie optional?


http://www.ellistabletalk.com/

Yep. Sounds like a Labor commentator. Want's to keep us in the 1950's and has no concept of the impact of the digital economy. Attacks Hockey for wanting to address the financial and online world as it is in 2015.

 

[JulieW]

http://www.ellistabletalk.com/A tax is only the cost of things.

'With taxes,' Frank Crean once said, 'you buy civilisation.'

When interest rates go up, we wear it. When house prices go up, we cope with it. When rents go up, to even three thousand a week for a shoe shop in Avalon, we deal with it as best we can.

But a 'tax rise' we think is unbearable. This is ridiculous.

Taxes buy us our nurses, our ambulance drivers, our teachers, our Test cricketers. They give us, in acting schools, our Blanchetts, Gibsons, Kidmans, Luhrmans. Taxes win us Oscars.

They're really worth paying. But how do we do that?

With an additional dollar on cinema tickets we could fund the film industry. With a two dollar levy on theatre programmes we could add ten million to the STC, forty million to the Opera, three quarters of a million to the Theatre of the Deaf.

It's not a bad way of doing things.

We proclaim the GST is 'regressive', and it is. But if it funds the jobs of a thousand firemen, a thousand ambulance drivers, a thousand special-needs teachers, it is also progressive,

Sothe answer to everything is fairly simple. You end negative gearing. You end the tax advantage enjoyed by super-rich superannuants. You cut by two thirds the number of Coles and Woolworths outlets in this country. You do not privatise the electricity and thus lose a hundred and twenty billion dollars that would go to social services in the next century. You put dining cars on all trains and put up the fares on those trains by ten or twelve percent. Andas regards the GST

Well, you vary it. You bring down to nine percent the GST on soap, and toilet paper, and shoes, and nappies. And you put a three percent GST on all food.

This would raise the price of a banana toone dollar and three cents? How bad would that be?

It would seem no more than the variation in price in the usual shop, in the usual way.

Yep. Rabid socialist.

 

[Oldsoul]

http://www.ellistabletalk.com/A tax is only the cost of things.

'With taxes,' Frank Crean once said, 'you buy civilisation.'

When interest rates go up, we wear it. When house prices go up, we cope with it. When rents go up, to even three thousand a week for a shoe shop in Avalon, we deal with it as best we can.

But a 'tax rise' we think is unbearable. This is ridiculous.

Taxes buy us our nurses, our ambulance drivers, our teachers, our Test cricketers. They give us, in acting schools, our Blanchetts, Gibsons, Kidmans, Luhrmans. Taxes win us Oscars.

They're really worth paying. But how do we do that?

With an additional dollar on cinema tickets we could fund the film industry. With a two dollar levy on theatre programmes we could add ten million to the STC, forty million to the Opera, three quarters of a million to the Theatre of the Deaf.

It's not a bad way of doing things.

We proclaim the GST is 'regressive', and it is. But if it funds the jobs of a thousand firemen, a thousand ambulance drivers, a thousand special-needs teachers, it is also progressive,

Sothe answer to everything is fairly simple. You end negative gearing. You end the tax advantage enjoyed by super-rich superannuants. You cut by two thirds the number of Coles and Woolworths outlets in this country. You do not privatise the electricity and thus lose a hundred and twenty billion dollars that would go to social services in the next century. You put dining cars on all trains and put up the fares on those trains by ten or twelve percent. Andas regards the GST

Well, you vary it. You bring down to nine percent the GST on soap, and toilet paper, and shoes, and nappies. And you put a three percent GST on all food.

This would raise the price of a banana toone dollar and three cents? How bad would that be?

It would seem no more than the variation in price in the usual shop, in the usual way.

Yep. Rabid socialist.

Ah the old lie

"Taxes buy us our nurses, our ambulance drivers, our teachers, our Test cricketers. They give us, in acting schools, our Blanchetts, Gibsons, Kidmans, Luhrmans. Taxes win us Oscars."

Income tax was introduced in 1913 in the US as a temporary measure. Funny how the US evolved from 1800 to 1913 without it. The only thing tax increases invariably create are more civil servants and laws.

 

[errol43]

^^^^From 1800 till 1913was there any depressions in the US? Was there any currency fiat collapses?

Regards Errol 43

 

[Lovey80]

Has anyone done some more digging into this? The idea seems simple and fair enough, anything that gets rid of progressive tax rates and personal income tax has been wanting to know more. What's the catch?

First, re-read the original article because on the day of it's publication after some convo (on Twitter) with the articles author he highlighted he'd made a mistake with the % (e.g. $62 tax to buy a house has now been updated to $625).

Something I pointed out to him after reading up on it was that 75% of the transactions were high value (average $3.6m per transaction which would incur $4500 tax per side of the transaction):

https://twitter.com/BullionBaron/status/578009782096785408

That's the sort of fee that would see many move their accounts offshore to avoid or find other ways around moving capital.

I love the idea of a simplified tax system, but think this would be far too easy to workaround for a large % of the transactions.

That's a minuscule figure with respect to the potential profit/capital gains/income tax that would incur much much higher percentages of tax on a deal that large. 3.6m @ 5% profit is 180k with a potential capital gain of say 50k plus is a lot more to invest effort in hiding. With no capital gains/company tax to write off certain things ere is certainly less incentive for tax avoidance. Of course a heap of measures would be put in place to track such transactions.

 

[Lovey80]

The catch is that they may make cash illegal.

Ok a pretty big catch, but no one is doing massive dodgy deals in cash anyway these days unless you're a drug dealer.......

There's a HUGE cash market in services here. Haven't you ever been offered a different price from a tradie for cash payment?

Absolutely but many accept it purely because the governments tax burden is so large. On the flip side many tradies run the gauntlet with cash because they can't register it as income when applying for credit. With the burden reduced significantly there would be much more incentive to declare everything to show much higher turn over and income and take the benefit of having more available credit to grow a business.

 

[Oldsoul]

^^^^From 1800 till 1913was there any depressions in the US? Was there any currency fiat collapses?

Regards Errol 43

Yes. There was near continuous phases of recovery and depression and fighting between a gold standard and a bi-metallic one. One camp in silver and the other in gold. The fiat issued by the southern states during the civil war collapsed.The recessions tended to be deflationary but look what that population accomplished in that time without anyone claiming that the sun the moon and the stars were made by government. It's a very modern statist phenomena that suddenly government is taking credit for everything that is or was or shall be. It is as if government does not actually know what it is for anymore so just claims that nothing would exist without it, which is a lie.

 

[col0016]

^^^^From 1800 till 1913was there any depressions in the US? Was there any currency fiat collapses?

Regards Errol 43

Yes. There was near continuous phases of recovery and depression and fighting between a gold standard and a bi-metallic one. One camp in silver and the other in gold. The fiat issued by the southern states during the civil war collapsed.The recessions tended to be deflationary but look what that population accomplished in that time without anyone claiming that the sun the moon and the stars were made by government. It's a very modern statist phenomena that suddenly government is taking credit for everything that is or was or shall be. It is as if government does not actually know what it is for anymore so just claims that nothing would exist without it, which is a lie.

There are few things I hate more than listening to politicians talk about how many jobs they've "created".

 

[JulieW]

Propagandists working hard at the moment. Interesting that on the 'you have read your free 30 articles a month' sites, the tax propaganda is not counted it appears.

Private companies such as those controlled by the billionaire mining magnate Gina Rinehart will be exempt from new laws requiring the publication of their tax information because of fears this could jeopardise their safety and possibly lead to kidnappings.

The assistant treasurer, Josh Frydenberg, told the Coalition party room on Tuesday the publication of the financial statements of large private companies raised "real safety concerns". He said the 700 private companies captured by the new law covering more than 1,600 companies with a turnover of more than $100m should be exempt.

http://www.theguardian.com/australi...-be-exempt-from-tax-regulation-says-coalition

The largest ever leak of Luxembourg tax deals has exposed the complex schemes used by hundreds of Australian and international companies to drastically shrink their tax bills.

The Future Fund, Lend Lease, AMP and Macquarie Group are among dozens of Australian companies whose tax arrangements are revealed in nearly 28,000 pages of leaked documents, according to analysis by the Australian Financial Review.

The Australian arm of the furniture retailer Ikea paid less than 1% tax over the past 12 years, the AFR reported.

http://www.theguardian.com/business...australian-companies-engaged-in-tax-avoidance

Tax avoidance by some of Australia's largest companies could be costing the federal budget more than $8bn per year, according to a new report.

Almost a third of ASX-listed companies pay less than 10c tax in the dollar and some companies, including the Westfield Retail Trust and James Hardie, pay no tax at all, the report, released on Monday by the union United Voice and the Tax Justice Network, found.

Tax avoidance strategies save Rupert Murdoch's Twenty-First Century Fox an estimated $1.6bn each year globally, the most of any ASX-listed company.

The report also found that over half of the ASX's 200 largest corporations admitted to setting up subsidiaries in tax havens, allowing many to pay substantially less than the statutory corporate tax rate of 30%.
http://www.theguardian.com/australi...avoidance-costing-budget-more-than-8bn-a-year

Hidden in this week's tax discussion paper and in the earlier intergenerational report is an inescapable reality we need more tax.

Income tax and goods and services tax, and taxes on superannuation the taxes that affect us will have to climb in order to fund the things we are going to need. At the same time, company tax will have to fall, eventually plummeting towards zero in order to make sure we retain the investment we need.

The trick is to grab more of the money that's bolted down and unable to leave the country, and less of the money that's footloose. It's anything but fair, but tax is about raising revenue more than it is about fairness, and we can't raise revenue we frighten away.

http://www.theage.com.au/comment/tax-go-hard-on-locals-but-easy-on-foreigners-20150330-1manld.html