It's not all that often you come across a rational and well researched article on tax, but this is one of those times.
Given a structural deficit only able to worsen, there is a compelling argument for real reform and massive simplification in this area, YESTERDAY!
Given one can't be half pregnant, there needs to finally be some rationality applied to the funding models of both health and education, if only to eliminate huge wastage and double dipping by management admin fee deducting officialdom, from scarce finite funds!?
For mine, the most logical approach would be a direct (rationalized pro rata) funding model and total local autonomy, to completely eliminate entirely unnecessary fee charging bureaucracy altogether; saving at least 30%, which could then be directed at the coal face and vastly superior education/public health outcomes.
With that done, any argument to continue collecting a GST for the states becomes null and void!
The GST, to state the blindingly obvious, is the principle or only reason, we can't get any real movement on real tax reform, which if intelligently constructed; will #1, finally and actually remove the ability of massive multinationals/anyone to avoid a fair tax share.
#2 Remove the need to also pay tax compliance, thereby reducing the average (local) business burden by around 7%, which is what is currently ripped from the average bottom line by tax compliance costs.
And arguably more than an unavoidable broad based, stand alone tax, would need to be!
A stand alone unavoidable expenditure tax of around 18% initially and progressively reduced; (5%?) is arguably the only tax collection needed!
Particularly, if we finally end all the double dipping and entirely unnecessary bureaucratic involvement/admin fees!
We are with one single exception the most over governed country in the world, and should no longer put up with self serving, mug manipulating pollies, simply protecting their patch or position.
N.B. Tony!
Place the incumbent at the bottom of the ballot; for several subsequent elections to remove the only current impediments to real tax reform and the consequent lowest REAL TAX BURDEN in the western world!?
Rhrosty.

At the rate the Yanks are taking over our country, soon we won't have to answer questions like this

Yeah, the Yanks will sort us out and probably keep our taxes just like the Israelis do to the Palestinians.

The Yanks will decide which war Australia will enter next, who will be our Governor General, which minerals Australia will sell, and how we must vote at the U.N. and at our next Federal Election.

GST? The Yanks have all the answers even if they are stony broke!

Get rid if the GST and have a small turnover tax on all transactions with no excuses. Then you get almost everyone.

The other solution is Govt Banks that can create new money debt free for infrastructure.

So Arjay:

How do you plan to implement your turnover tax? Will you abolish cash and mandate electronic transactions only? If you do abolish AUD cash how do you stop people using other currencies (either fiat eg. $US or cryptos eg. bitcoin)?

Regards your other solution-- how does a Government issue debt free money in the modern age?

thinkabit the biggest tax evaders are the big corporates and not the cash economy. The derivative ,currency transactions and share market turn over $ 137 trillion pa in Aust. That's right trillions to 91 times our GDP.

We used to have the Commonwealth and 4 state Govt banks but sold them off and now need more taxes to pay private banks who just create money from nothing. Usually their leverage is 10:1 .Now it is 70:1

Where'd you yank that one from Dave? Doubleday's dam Yankapedia?
Rhrosty.

Arjay:
I am already aware of the astronomical numbers involved with securites and currency trading and that it appears to provide a large target for taxation. However, you haven't answered how you implement a transaction tax without the consequence that the traders just work around it-- in other words: How do you stop them from "engineering" their practices and methods so that the trades don't involve transactions denominated in AUD by Australian companies in Australia. Remember, the people who do this are very clever and already work around existing laws to avoid paying tax.

Regarding the Banks, even if the banks were owned by the Government our currency is still debt based. All currency in today's modern advanced economies is debt based fiat currency. To change from fiat currency to commodity or crypto or some other based currency is a massive social and economic change.

Note that I'm not saying that your ideas are bad per se, it's just that I can't see how they can be implemented without introducing huge upheaval or by waiting for a financial emergency such as a world power country's government default. (By the way- I believe that the current US dollar lead system will eventually collapse-- anyone can see that the US government debt is unsustainable).

The GST is central to the taxation philosophy demonstrated by the Liberals in every term of office and weakly echoed by the "me toos" in the ALP.
In plain language it means the many to pay more so the few can pay less.
Accordingly the Howard government introduced the GST in order, simultaneously, to reduce the corporate tax rate by 16.7%. The present Liberal government is restricting state budgets in order to manoeuvre the states into going along with another GST rise - another Great Big New Tax. On the many. To protect the Libs' major sponsors. Small businesses will be lumbered with compliance costs along with the loss of business.

Good article! Unfortunately, this brings out the turnover tax mob, where such a tax carries all the deadweight and damage of a GST. The tax job's been done excellently and "maturely" by The Henry Tax Review, Tony Abbott, and thank God the GST was excluded from further consideration. Remember, the Henry Committee wanted 120 taxes ABOLISHED and only two added: a mining tax and a land tax? That sounds pretty good to me!

There are cities as large as Australia, [population numbers,] run by single administrations.
Meaning, much more efficient use of finite funds.
State governments, and before they pass any new law, or provide a single public service, cost the Australian taxpayer at least 70 billions per, with 35+ annual billions of that, eaten up via duplication and unnecessary admin fees and charges.
thinkabit would do well to actually think-a-bit, ditto fearless freckless freddington; albeit, possibly having to tolerate the smell of burning emanating from previously unused cerebral circuits.
A turnover tax is attacked, mainly because it can be manipulated by clever private operators and or avoided by the cash economy.
Instead we need an expenditure tax, collected automatically via the banking fraternity's mainframes, and then only as money leaves an account.
Simply put, you can't alter any of that via sharp practice, given the already low rate doesn't allow for any exclusions or adjustments! No ifs buts or maybes. And banks are not knowingly going to be party to criminal fraud!
And given we control the money printing presses, changing the ink from time to time, would require those hoarding money, to front up to exchange their outdated currency for new notes/legal tender!
In which case, those showing up which bulging suitcases filled with money, will still find themselves paying the avoided tax, as they would need to deposit their outdated money, before any exchange could progress.
And then for only 80 cents in the dollar!
They'd be better off in the long run, just paying their share of a common burden and avoiding unwanted official surveillance! The mafia's strategy!
Tax avoidance remains a criminal offence!
An expenditure tax includes all bank transfers and international remittances.
As Arjay has pointed out, the cash or black economy is just a drop in the tax avoidance bucket, when compared to multinational multibillion tax avoidance; (100 billion per) which by the way supports a very well heeled unproductive parasitical industry, which interestingly, can be relied on to agree with thinkabit and freddington?
Rhrosty.

When, oh when, are we going to get real tax reform?

The first necessary principle, is that the tax must be VOLUNTARY.

No more compulsory taxation! The enforcement arm of the tax office could be abolished and the employees sacked!

Gambling taxes help a lot, and are a step in the right direction, but this is what we should be thinking of:

What we need is a voluntary tax on sex. Each resident who reaches the age of 18 would have to decide whether or not they wish to have sex in the coming year. If they wish to have sex, they should buy a sex licence, costing $5,000; if they do not wish to have sex they should buy a virgin permit, also costing $5000. Residents would be free to switch between the two any number of times they wish during the year.

Purchase of a sex licence/virgin permit would remain completely voluntary. However a woman without a valid virgin permit could not prosecute a charge of rape, and any man who comes closer than 10 metres to any woman without a valid sex licence would be subject to six months imprisonment.

In order to be non-discriminatory, the fee would be the same for all without regard to age, sex or income.

The most equitable transactions tax, which would also recover at least some of our lost national independence, would be a Tobin type tax on all conversions of Australian currency into foreign currency and all conversions of foreign currency into Australian currency. A rate of 0.1% would bring in a lot or revenue and a rate of 0.5% to 1% would have the added advantage of stopping a large amount of international trade in finance.

Hi Rhrosty,

Most of your comments make some sense but the one on this subject requires a reply.

You said that the government could suddenly change the banknotes it issues and catch the hoarders when they tried to change their hoard into the new notes.

You should be aware that this trick has been tried by various governments around the world over the last century. The only problem with it is that it will only work once. For some unaccountable reason people will decline to save their assets in the new currency, and choose some foreign currency or gold instead. You will then have the situation that prevailed in most of the eastern bloc during the cold war of spivs accosting tourists and offering to change their money at black market prices. If you care to take a trip, go to Argentina and you will see that this is what is happening today. The old adage is once bitten, twice shy. If the government responds by making possession of foreign exchange a criminal offence, such as happened in Cuba and Zimbabwe, you will be well on the way to economic collapse.

Whenever you suggest a solution, always remember the Golden Rule of capitalism, which is that the guy that has the gold makes the rules.

Any action in Australia along the lines you have suggested would almost certainly make our overseas lenders decide to call in Australia's foreign debt.

plerdsus, we would go broke building prisons.

No to the GST altogether.
Bring back the old wholesale sales tax and make it 40%, like it used to be, on junk food, luxuries, soft drink, alcohol etc etc.
Ever wonder why half your supermarket is now taken up by crap? Wonder why it is cheaper to eat takeaway than cook? Wonder why there are so many fat people? Not to mention making every tradie, barber, accountant etc a tax collector.