Raise Taxes, Raise GST, Lower Standard of Living – ConspiracyOz

Helgelian Dialectic in Action!Problem, Reaction, Solution.

Problem: Raise Taxes  Reaction: Need Funds for Hospitals and Education etc Solution: Broaden then Raise the G.S.T.

(The Plan all along to crush our standard of Living?) – Mick Raven

Tony Abbott and Joe Hockey: Ditch debt tax and fix GST to improve budget

Jessica Irvine

www.dailytelegraph.com.au

May 06, 2014 3:25PM

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Taxman Abbott

THE Australian people hired Tony Abbott and Joe Hockey to fix the nation’s budget.

Turns out, they underquoted for the job.

Before the election, Tony Abbott insisted he could do the necessary repairs with spending cuts alone, without resorting to tax increases.

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On closer inspection, Abbott and co have discovered a budget beset with rising damp, in need of major structural repairs to both the spending and tax sides of the budget.

FEDERAL BUDGET: Latest stories, videos

Fair enough, but their proposal for a temporary tax levy on high income earners is little more than a political patch-up job that risks exposing them as the most amateur of home renovators.

It’d be like painting over rising damp, rather than identify the source of the water leak, fixing it and rebuilding the wall.

The leak in Australia’s budget can be easily identified: it’s the GST. The greatest economic reform of the Howard and Costello government is raising less revenue than previously hoped.

The exclusion of services like health, education and childcare from the GST is bleeding ever more money from the budget.

JESSICA IRVINE: Broader GST would raise substantially more than a tax levy

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Question Time-Reps27March14

This is a fine mess you have got me in … Prime Minister Tony Abbott with Treasurer Joe Hockey. Source: News Corp Australia

 

Why? Because as Australians have got richer, we have increasingly chosen to spend more of our income on these things. More Australians are purchasing more medical services and sending their children to private schools and childcare centres. Health and education, as it turns out, are what economists call “superior” goods — demand for them increases as incomes rise.

This trend will only continue as our ageing population increases demand for health care.

The problem for the budget is that, thanks to political carve outs agreed to a decade and a half ago, no GST is collected on these transactions.

Modelling by Deloitte Access Economics shows that Abbott and Hockey could raise $12 billion in one year alone — more than a debt tax would raise in four years — by broadening the base of the GST to include these goods and services.

That would go a long way to repairing Australia’s tax base for good.

Arguably, Australia’s headline rate of 10 per cent is also in need of a sprucing up. New Zealand has increased its consumption tax twice since introducing it at a rate of 10 per cent in 1986. Today it is 15 per cent and the kiwi budget will be back in the black this coming financial year.

Lifting Australia’s GST rate from 10 per cent to 12.5 per cent would raise another $12 billion a year. It would also likely be very unpopular, leaving a broadening of the GST base as the more likely outcome.

But it’s not just the money an expanded GST would raise.

Broadening the GST would also save time and hassle for small retailers who still have to decide which goods are subject to GST. Yes to pre-packaged cakes, but no to milk, flour, sugar and eggs.

The GST is also a good tax for an ageing population. Fewer retirees will be earning incomes and paying income tax in coming years, they’ll still have to eat. That might sound harsh, but the unavoidability of the GST is precisely why economists like it so much. Unlike income taxes, people can’t go to lengths to avoid paying the GST, like working less, hiring fancy accountants to reduce your liability or pouring money into tax preferred vehicles like family trusts.

Revenue raised by broadening the GST could be recycled into lower income taxes or one-off compensation for low income earners. That’s the sort of lower taxes voters had expected from an Abbott government.

Australians are sick and tired of constant tax tinkering. Hockey and Abbott should ditch their hastily constructed debt tax and instead lead a national conversation about broadening the GST.

Of course, Abbott must do as he promised and take any tax reform proposals to the next election for a mandate for change.

The truth is, Australia’s budget repair job can’t be done in one go.

Yes, Abbott and Hockey should go in hard in next Tuesday’s budget to fix the spending side of the budget.

But the repair work must continue beyond next week to fix our leaky tax base.

There can be little doubt fixing Australia’s budget will be a politically costly repair job — greater perhaps than Abbott or Hockey ever suspected.

But it’s a job they owe it to the Australian people to do properly, or we face a budget rot that will continue for decades to come.

Posted on May 21, 2014, in ConspiracyOz Posts. Bookmark the permalink. 2 Comments.

  1. The GST is a government/corporate tax and is a sinister brutal tax that erodes the incomes of working people by its broad base and inflationary spiral.
    The author of this article seems to suggest an increase in the GST rate or a broadening of its base as has been the ‘behind the scenes’ talks of this government……. her paper would have access to this info…… not us!
    An increase in GST would not be popular especially broadening its base and they know it so it seems to me that the author is just part of a corporate plan to burden the Australian worker with more tax as a pathetic solution to solve the woes created by inefficient corporate governments.
    A simple stint with a calculator using a annual gross income of $100,000.00 shows that with the wages tax and GST almost fifty percent of income is paid out in tax.
    This allows approx. $50,000.00 in disposable income which is approx. the gross income or Basic Wage of the average worker less, of course, the wages and GST/indirect taxes.
    Another stint on the calc and you have a disposable income of approx. $34,000.00….. this net income is below the poverty line for families whether you pay a mortgage or rent without the other GST or other indirect taxes applied……. try owning a car on top of that!….. send the wife to work is the solution so who minds the kids?…. checkout child minding costs!
    Yes… our illustrious journo’s who produce nothing but what they are told to write have no credibility any more…… they have cried Wolf far too often.

    The remarks were apparently made by Swinton, then the preeminent New York journalist, probably one night in 1880. Swinton was the guest of honour at a banquet given him by the leaders of his craft. Someone who knew neither the press nor Swinton offered a toast to the independent press. Swinton outraged his colleagues by replying:
    “There is no such thing, at this date of the world’s history, in America, as an independent press. You know it and I know it.
    There is not one of you who dares to write your honest opinions, and if you did, you know beforehand that it would never appear in print. I am paid weekly for keeping my honest opinion out of the paper I am connected with. Others of you are paid similar salaries for similar things, and any of you who would be so foolish as to write honest opinions would be out on the streets looking for another job. If I allowed my honest opinions to appear in one issue of my paper, before twenty-four hours my occupation would be gone.
    The business of the journalists is to destroy the truth, to lie outright, to pervert, to vilify, to fawn at the feet of mammon, and to sell his country and his race for his daily bread. You know it and I know it, and what folly is this toasting an independent press?
    We are the tools and vassals of rich men behind the scenes. We are the jumping jacks, they pull the strings and we dance. Our talents, our possibilities and our lives are all the property of other men. We are intellectual prostitutes.”

    We are controlled by Corporations and a Corporate Government and our Judiciary is primarily Merchant or Corporate Law and as some scholars claim ‘Talmudic Law’.

    If we allow these corporate criminals in Canberra and their counterparts in crime, the Intellectual Prostitutes, to force more taxes on us then we will become the serfs to a corporate controlled world….. Gus

    Worth a look.
    http://ausind.tripod.com/DebitTax.html

    Like

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