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The Forum > Article Comments > GST change is not the answer > Comments

GST change is not the answer : Comments

By Peter Hendy, published 11/8/2014

I have a warning for my Liberal and National Party colleagues: speculating on increasing the revenue take from the GST is playing with fire.

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< The Premiers are calling for more tax revenue to fund massive increases in education and health expenditure that were promised by prime ministers Gillard and Rudd. >

Why is it, Peter Hendy, that politicians of both persuasions seem to have an enormous blind spot with this whole issue?

Why is it always all about increasing funding – increasing and refining the tax base – in order to meet our almost overwhelming need for improvements in education and health?

Why do we never hear anything about the other side of the coin – the rapidly, constantly and neverendingly increasing demand for all of this which is comes as a direct result of our absurdly high immigration rate?

Surely it has got to be about both supply and demand, and not just constantly about only the supply side.

The day that your Coalition buddies, and the Opposition, start talking about the demand side, and the need to reduce the immigration rate directly in relation to health, education and all other infrastructure and services, will be the day I start to gain a basic level of respect for them.

Perhaps the biggest issue of all here is that any increase in GST or any other refinement of the tax system that reaps the government a significantly bigger return, would predominantly go into the DUPLICATION of basic infrastructure and services to meet the needs of new immigrants and into repairing or upgrading existing I&S that has become overburdened by this rapid population growth. And scant little of it would actually go into real improvements of the sorts that would significantly benefit current residents.

We are having great difficulties in simply keeping up the basics for the increasing population. So.. what should we do about this? Should we continue to have very high immigration and to struggle with it all, knowing that the task is nigh on impossible even if the tax take was to suddenly become considerably larger…

… or should we pull tight back on immigration and give ourselves a fighting chance for the supply side to catch up with the demand?
Posted by Ludwig, Monday, 11 August 2014 9:25:04 AM
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Agree with most of this Peter.
The GST was introduced against the express wishes of around 87% of Australian voters.
Moreover, it was merely revenue surety, masquerading as real reform!
And rather than simplifying our tax system it massively complicated it.
It transferred the tax burden from the wealthy to the poorest, and was labeled by some democrats as a granny killing measure.
And when Honest John faced the electors, after forcing his hugely unpopular reform through, he won the resulting election, with just 49% of the two party preferred! This simply wasn't a mandate by any fair-minded measure!
A bombastic Beasley, would have done better, if he had stayed the course, differentiating new labor from the coalition, instead becoming a me too, pale shadow.
The GST was introduced to allegedly combat the off-shoring of around 95% of corporate Australia, who took their former tax liabilities with them.
We could increase the GST, and apply it to all goods and services, if you're locked into conventional economic theory, and then offset any real harm, by doubling the pension?
And while that's an option, I prefer a radical departure, from conventional thinking; on the grounds of doing what you've always done, gets you just what you've always got!
If there's a revenue shortfall, it could be completely cured, just by completely eliminating all forms of welfare for the rich, reform which would boost the budget bottom line by some 70 billions, or if you will, by 20 billions more than the current deficit.
Meaning debt could also be wound back and or repaid in just five or so years. Belt tightening should be applied more heavily on the better off, rather than those whose budgets are so low, they can on longer afford winter heat, or even more importantly, summer heat wave cooling! Continued.
Posted by Rhrosty, Monday, 11 August 2014 9:46:25 AM
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A national emergency, would allow all state govts to be suspended, as they were during WW11. And that simple measure, would save the most over-governed nation on earth; bar one, a further 70 billions PA!
And indeed, without loss of a single service; and allow the govt just to crack on with what must be done.
And there's around 30% current expenditure to be saved, without said national emergency, just by granting complete local autonomy, and a direct funding paradigm.
Bound to be resisted by many often seemingly corrupt state governments, given it would shrink them and or the power they wield.
Even as they waste billions of increasingly scarce resources, just puffing themselves up, or promoting pure self interest!
I mean just look at the real estate holdings of politicians, and just what state laws and a failure to release enough urban land, has done to house prices etc!?
What we really need is to throw the whole rotten mess out, and replace all that extraordinary costly complexity, with a single stand alone, unavoidable expenditure tax.
A rate of 18% initially, would raise around 380 billion from a 1.6 trillion dollar economy and as former avoiders, were forced to pay their fair share.
And given tax compliance expenditure would then be no longer necessary.
A 7% savings to the averaged bottom line, would make the real rate an effective 11%, or if you will, the lowest real tax rate in the developed world!
Further, the rate could be further and further reduced, to as low as around 5% variable as all current avoidance was obliterated. Continued.
Posted by Rhrosty, Monday, 11 August 2014 10:05:54 AM
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A 5% marginally varied rate, taken as the only tax necessary, could then be marginally varied region by region as necessary, up and or down and simultaneously, to alone control all inflation/stagnation; meaning, interest rates could be lowed to set and forget, historical lows, to kick in the economic afterburner for the non performing parts of the economy, and without adding anything to more rapidly controlled inflation!
A single stand alone unavoidable expenditure tax set at around 5% variable, would if applied equally and without fear or favor, or special case exclusions, would raise at least 100 billions more, than the total take from all sources.
Naturally, the ATO and all other also entirely unproductive tax practices, will argue for the status quo, and claim as they now do!
We already have a broad based tax.
The only problem with that, most of the offshore corporations doing business here,( some with budgets bigger tan many sovereign nations,) can successfully avoid it, as does some of the purchases done on the internet.
Even so, this measure, if fully implemented as outlined, would add around 30% to the bottom line of Aust. based business, a huge imperative to return.
And around 25% to averaged household disposals, making a non-contributory 15% super immediately doable, and indeed, end forever, the so called destiny of demography!
Posted by Rhrosty, Monday, 11 August 2014 10:21:44 AM
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The final piece of the puzzle is the roll-out of Cheaper than coal, thorium based power, and given local micro-grids, able to be supplied to industrial estates the length and breadth of the land, for less than half what is charged elsewhere; and without any subsidies.
But only if it remains in public hands, rather than price gouging private hands.
And if there's a better place or better way to invest the huge new surpluses, I for one would like to know what they are!
The only thing that allowed public ownership to become an albatross around the nations neck, was the lack of competition!
That could be completely overcome, by more regional competition, contractual managers, and staff, who could tender for three year job contracts, and then compete as if they were private operators, for market share.
If only to ensure costs and what have you were fully met, and without having to dip into a sizable security deposit, as part of the normal conventional tendering process!
After that, we just need to crack on and convert our cities to ones more and more reliant on locally produced endlessly sustainable biogas!
On the grounds, nothing else is as cheap!
The byproducts are also extremely useful, and can replace many expensive imports; all while underpinning a viable alternative endlessly sustainable local oil industry!
And if we can't do any of it; it will only be because some very recalcitrant, intransigent pollies, stand in the way?
And possibly, for the worst possible reasons; or put another way, for he who must be Obeid!
Posted by Rhrosty, Monday, 11 August 2014 10:50:45 AM
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I thought I might join the Rhosty show, if I can get a word in that is.

Ludwig, the huge increase in immigration has seen the hopes and dreams of many simp,y dwindle away. Like those amou g us, whom aafter having worked all their lives, in the hope of a comfortable retirement, only to now have that dream shattered because there's simply not enough to go round. but, it didn't have to be like this, if we simply had insisted that, if you wish to come here, you must have something to offer and not simply be a passenger. I mean, where else in the world could you arrive here, never work a day, yet be paid $50,000 for the privilege of having ten kids. It's been a joke for years and is o ly getting worse.

As for the GST, perhaps one option is to include all goods and services, then reimburse the genuine needy. Of cause the hardest par of this would be to determine who the needy really are.

Another option would be to raise the tax free threshold so as to accommodate the additional spend on the GST.

There are several issues we must address before much longer, otherwise any amount of tax reform will simply be playing catch up.

An immediate ban on all non productive immigration, if not all together. No more 457's, and of cause a finacial transaction tax so even those taking their profits off shore pay their taxes. These are just a few.

Of cause the problem is governments get voted out for doing unpopular things, with those opposed rarely acknowledging the cause of the problems in the first place.

I can't see much changing so it's going to be a case of every man for himself I fear.
Posted by rehctub, Monday, 11 August 2014 2:46:31 PM
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