Any alternative tax system is worth considering.

The present system is cumbersome, prone to both anomaly and error and is, most likely therefore, "unfair" by default.

I am not sure anyone could ever devise a “fair” tax system because people, being people will always focus their interest on their own disadvantage compared to their neighbour.

So if we say fairness is a national impossibility, maybe we should go to simplicity.

For simplicity, in my book, read “fewer”.

We have GST, FBT, Income Tax (personal and corporate), CGT, Land and Stamp duties, import duties, excises, and soon we might even have a carbon tax, courtesy of the man elected to and seemingly heel bent upon bring us another "recession we have to have".

As well as that we have all the user-pays governmental charges from EPA and planning regulations and licences to vehicle tax then we have water rates, council rates, charges for parks and gardens, the removal of sewage and this is in no way intended to be a comprehensive list.

A swathe of charges and what value do we receive?

Well the "benefit" is a different story so I will not go there.

But is the cost of some of the supposed "Regulation" actually worth the bother, both financial and personal?

Back to simpler system.

Oldy was close when he observed the emphasis of taxing consumption versus savings.

GST does this quite effectively. It is one of the reasons I like it. The other reason I like GST is it is simple and it has a wide base. That means those who spend pay the most.

This automatically loads the tax cost to those who earn more, on the assumption that they have greater spending capacity and the poorer off pay less.

Of course, those who are more prudent or frugal do comparatively well versus those who spend like no tomorrow....

Col, GST at the moment probably costs the average small business as much to comply with annually as does annual income tax. That's before you get to particularly complex areas like the margin scheme. While it provides some simplification in the eradication of other taxation regimes, GST in itself could be significantly streamlined.

As another person pointed out, consumption taxes hit the lowest earning the hardest. So if we were to re-write the tax system so that we had only GST, then we would need to re-write the welfare system too and supplement the incomes of our lower-earners so that they could cope with the rise in costs.

Then you ignore the social benefit tax schemes of tobacco and alcohol excises, which are supposed to assist a user-pays principle, given that we have free health-care. Do you do away with these as well and go back to having society as a whole pick up the tab for associated health problems??

Cetainly a consumption tax that is levied only on domestic consumption would go further towards encouraging exporting and improving the current account balance, as exporting businesses would be more competitive by not having to levy GST on their prices. Given our obsession with importing "cheap" goods from developing countries, this is probably a good thing.

Going down this path you would also need to legislate against salary-packaging, so that some people would not be able to rort the system by having their employer pay for certain items and thus claim back the GST.

gw, perhaps you should study a bit of economics before wasting their time. I think you'd find it enlightening.

I would like to expand on my suggestion of a tax on all withdrawals – if you like a consumption tax.

As Col Rouge pointed out there are too many different taxes. John Hewson went part way towards eliminating many of them with his 15% GST. A consumption tax would eliminate the need for income tax, FBT, CGT etc. and would be an equitable method for Governments to derive their income. Again, as Col Rouge points out, because of their greater spending capacity those who earn more will pay more tax than those who earn less and who, therefore, would have a lesser spending capacity.

The system would be based on the obvious premise that for every dollar earned there would be a corresponding amount paid whether the payment is immediate or deferred. With some exceptions all withdrawals whether in cash, cheque, electronic transfer, credit card or payments through institutions such as Australia Post would be taxed and would include distributions of profits in whatever form – dividends, trust distributions etc. Also included in the taxed withdrawals would be payments of a capital nature.

The banking system would collect the tax and pay same to the treasury thereby eliminating the need for a collector of taxes from individuals, companies and trusts etc. The banking system would also be responsible for catering for the exceptions and whilst the objective is to make the system as simple as possible there must be exceptions.

The exceptions will cater for the likes of the following using special accounts:

• Federal, State and local government bodies/departments
• Not for profit/donor gift recipient entities
• Loan repayments

These special accounts would be flagged to indicate that that tax was not payable on any transfers to those accounts. Obviously there would need to be some dialogue between the payer bank and the payee bank. Computers would need to be programmed to achieve this end but with the equipment available I don’t believe this should present any difficulty.

I think we should have 20% flat income tax for annual income over twenty thousand dollars, no capital gain tax, 10% GST and a much smaller government.

Yes, all your comments prompt deep thought and, as I expected, all bring up legitimate points to be considered.
In my limited study of Economics, I was most impressed by the effects of competition to create a healthy economy and healthy society (mostly though, as they say, I think Economics was invented to make Meteorologists look good!)
My perspective of economics and the tax system comes from practical, direct involvement as having been an employee, employer,a small business owner/operator (cash business), agricultural business, land owner, local Govt. representative, husband and father and community involvement.
Each area is crying out for simplification. The longer the present system goes on, the more complex it will become; new laws and changes constantly until what?
There are rich people and poor people under our present system as there is under any system.
If a person or business has low margins (higher costs) they would fare worse than a high margin business or income. However the higher margin areas would naturally attract more competition or people moving into that business and reduce, over time, the higher levels of profitability.
Also, cannot business pass on the cost of the tax by raising prices? The only ones that can't are primary producers.
I would ask each person to quickly weigh up if they would be better or worse off with a , say, 5% gross tax on income or sales with no other taxes whatsoever.
For myself, it is a mixed bag, however looking a year or two ahead, it is favourable and I'm less restricted.