Well it appears we are devided when it comes to a flood levy.

So, is this an opportune time to test the water with a 'transaction tax'?

Let's face it, it won't cause any real damage should it not work and, more importantly, if succesful, it may well pave the way for one simple, much debated about 'transaction tax'.

I propose we set the rate at .1%

.025 for the consumer and .075 for the financial insitutions. After all, they profit from our spending.

When you consider just how many times money chnges hands, this should amount to a heafty sum.

Now what could be fairer, as whether you earn one million per year or you are unemployed or retired, everyone pays thier share and the banks share some of those billions they pocket each year from us, the consumers.

Of cause the percentages may be wrong, but we should have enonomists who cane come up with the majic number!

Mate, it's not necessary to help this lot find new ways to increase the tax rip off.

What we need to do is find some way to stop them wasting all of it.

Of course I had the strange idea that the GST was a transaction tax.

I have a problem with taxing money over and over again. I would prefer a higher tax rate for PAYE, higher rates for the very wealthy, corporate taxes and get rid of all other taxes; coupled with reduction in government waste and obsolete programs. We have a medicare levy and I would be happy with an Emergency Service Levy for disasters but get rid of the hidden taxes for this in insurance policies and the like.

AH Rechtub, it is called GST we have it.
But flood levee, gee if you only said lets have those numbers forever to set up a bank for such?
Next week it begins Tony Abbott the little man on a mission will get right in to the flood levee/tax.
Not to improve Australia, not to save money, that still must be spent,and we must pay, but to create a disturbance to win voters and throw mud.
It will work,oh yes mud sticks, but we all are far worse for it, our politics is bound for more from both sides more confrontation.
Less honesty, only the greens win out of that.

HB>>Of course I had the strange idea that the GST was a transaction tax.

GSt is not a transaction tax, it is one off end user tax. The only person who actually pays 'out of pocket' GST is the 'end user'. All others, manufaturers, retilers, services companies etc, etc, claim thier GST back.

A Transaction tax is on every financial transaction made and nobody can escape it, even if cash is used, because at some point that cash will be banked and taxed.

So this is why I feel we have an opportunity to 'test the water', without breaking our financial backs.

As for allowing our failed government an opportunity to collect and waste yet another tax, I HEAR YOU!

But, bear in mind, if the average wage earner spends $1200 per week,(apparently) then all they would pay would be an additional 30 cents tax. Give or take.

However, thier $1200 passes through so many hands(accounts) that when taxed at every transaction, adds up to a heafty sum.

It has been long debated that a transaction tax of around 2% has the potential to eliminate the need for ALL OTHER TAXES.

Now just imagine if this were so, the tax on $1800 per week (gross) could be as little as $36, a saving of around $500 per week to the PAYG earner.

So instead of bringing home $1200, they would bring home $1700.

Now woudn't that stimulate the ecconomy!

So, this is why I feel we should consider this as an opportunity to test that water once and for all.

Nothing ventured, nothing gained, and little to loose.

The problem is not the concept, rehctub, but in the huge vested interest in the status quo.

(I am assuming here that you are talking about an "automated payment tax" or "financial transaction tax")

The existing system is heavily people-oriented. Compliance with the requirements of personal income tax, corporation tax, GST, stamp duty and all the rest requires many thousands of accountants, auditors and lawyers, as well as a veritable army of public servants.

Imagine trying to persuade that lot that their "skills" are no longer required, and that the whole tax burden can be handled by computers.

So the very reason why such a system is so desirable, even necessary, becomes its biggest drawback: how would you redeploy these folk into productive work?

A financial transaction tax is so mind-bogglingly simple, both to understand as a concept and to bring into being, that it will never stand a chance of being introduced. Until, that is, we have a government that is unelected, and rules by diktat.

In the meantime, the flag for such a tax is carried by such worthy folk as Selwyn Johnson...

http://www.johnston-independent.com/financial_transaction_tax.html

Unfortunately, it is just one item on his list of bright ideas. A list that includes the Government running a Bank, the imminent arrival of an ice-age, and a stance against free trade. While it is quite on the cards that there are individual flashes of brilliant insight - as in the financial transaction tax - the message can easily become lost in the overall noise.

Which is sad, because the idea of getting rid of the masses of folk who increase the need for taxation by being parasites of the process of taxation itself, is a highly attractive one.

rehctub

I am not too sure you are a hundred percent correct. My memory sometimes lets me down, but I thought that the GST was applied at each stage of production, like a value added tax and passed onto the buyer. It was not like the wholesale tax that was calculated at the point of sale, and mostly on luxury goods.

What I am attempting to say does not make much sense. Maybe someone can explain more clearly how the GST works.

Flo, you are on the right track.

The difference between a transaction tax and a value-added tax is that the transaction tax is paid on the value of each individual transaction, and goes straight to the taxman. GST is paid "in full" at the final point of sale, the retailer to you, but at each stage it is only the added value that is taxed, and sent to the government.

It goes like this:

You buy a computer from a retailer for $550. $50 of that is the 10% GST. The retailer sends that to the government.

However, the retailer paid the distributor (let's say) $440, of which $40 is GST. So when he sends in his return, he identifies each transaction, the buying from the wholesaler and the sale to you, and pays the GST difference ($50-$40), a net $10.

The wholesaler in turn has bought from the manufacturer for (let's say) $330. So on his return he will remit ($40-$30) $10.

The manufacturer pays for the parts that go into the computer, so the game goes on down the line until the government eventually collects the whole $50. That's a whole lot of transactions, each paying their slice of the total. Let's say he buys $11 worth of components from each of ten component-makers, he will pay to the government $30 from the invoice to the wholesaler, less (10x$1) he has been billed by the component-makers

And if the manufacturer buys all his parts from Taiwan, then his sale invoice to the wholesaler will show the $30 GST component, but he will not have any offsets. Thus the taxman gets $30 from him, $10 from the wholesaler and $10 from the retailer, making up the $50 that appears on the final invoice.

With a transaction tax, the amount extracted is smaller, and it is sent straight to the taxman - no need to offset "GST paid" from "GST collected".

Hope that makes it a little clearer.

Pelican is the closest to being right, in the 1950 to 1970 period, we had a 66.6% top tax and the tradesmen paid 9 or 10% tax. The economy was very good, except for the reciprocal imports from the iron ore and coal exports started about 1957, which did not help our economy one bit. The excessive obscene incomes were causing higher prices of goods and services the same as now, but Harold Holt had the intelligence to put on that high top tax to bring those incomes back to earth. Most of the other taxes were brought in to try to cover up the losses due to that change from the high tax. The GST was levied only on the final price, dealers got a clearance to avoid paying it. I wouldn't give two bob for any of the party politicans who have been in parliament over the last forty years.

I agree a transaction tax would be an excellent idea, inasmuch as it's simplicity would make it impossible to rort. As to testing the water, I think we've already been there.
The first attempt at something approaching a transaction tax was the Bank Account Debit tax, where all withdrawals from cheque (transaction) accounts were taxed; at the tiny rate of 0.0006%. This was enough to pull in 2.24 billion in 99-00.
Strangely, the BAD tax was more unpopular than it probably deserved to be...

By the way, Our Government owned the COR oil company, Qantas and the Commonwealth bank, but either the governments reliased they were not competent to run them or they had other ideas, Bob Menzies sold COR to the other partner BP, Paul Keating sold Qantas Unfortunately I can't bring to mind who sold the Comonwealth bank, your father may remember. Maybe they needed the money for all their perks. By their lowering both the personal tax and the company tax, the various parties have given the companies and their CEO's the OK to charge whatever they like. The States used to be the only ones with the right to work mines, but whatever deal Bob Menzies and Lang Hancock got up to, Menzies decided that whoever located the coal, iron ore or other resources, could mine them. I am not aware that this ever went to referendum.

Firstly, my suggestion of a transaction tax is not intended as a replacement to all other taxes, it is just that I feel we have an opportunity to try this tax system instead of impossing a flood levey.

Now if it works well, then who knows.

GST.
I pay GST on certain items, rent, power, non-consumables.

The whole saler charges me 10% and pays that 10% to the government, then I claim it back in the form of 'input credits', net effect, the government makes zero from every transaction except for when the end user pays the tax. Then, and only then does the tax become realized.

Now to claim GST back one needs to have an ABN.

It is possible to trade and not pay GST, so long as your turnover is under $50K per annum.

GST is only ever paid and held by the government once. In fact, the mere cost of collecting then crediting the GST along the way must be mind boggling.

Now as for tax agents being out of pocket, that's life as the old saying goes, nothing lasts forever.

At the end of the day we should be serching for what presents the best for the masses, rather than trying to protect a miniority group, don't you think!

Remeber, time is ticking and our current taxation system is buckling under the presure and nearing it's use by date. Then what!

More taxes will not solve our economic woes.

Pericles thanks. I knew it was much more complicated. Are we paying tax on tax as the process proceeds? I believe it is a dishonest tax. I remember at the time, it being presented as a smaller tax than wholesale which could have been 30% or more at point of sale. The difference was that it was a one off tax. The correct name for the GST is value added, which explains how it works.

I do not understand why Mr. Rudd exempted the GST from the tax review. I think it has been in play long enough to see if it performs as well as was promised. I believe that the Labor government made it clear, that once introduced, there was no going back. I have been told I was wrong in this regard, but any voter that thought otherwise was not thinking. I think many relied on the Democrats not to let it through.

It maybe a good tax but there is no way it is not regressive. It is on most of the basis goods we buy.

A transaction Tax is no different to a GST. A flat rate GST or flat Tax for that matter is the fairest method of taxation. Included in this tax should be all service costs from medical to pension. Why there are still people out there who don't comprehend this is beyond me. I assume they're the same as those who want everything without any input. Sorry, but life's not like that. Pull your own weight & if you need help the GST has got it covered. Simple.

I forgot, we did not pays sales tax on services. I might be wrong but back in the days of high taxation except for some state taxes, the government relied mostly on progressive personal tax

Arjay>>More taxes will not solve our economic woes.

How would you feel if you only paid 2% of your income in tax, with the remainder being excess 'spending money'.

This is a chance to test this tax without disrupting the present system and, it may well prove once and for all that a transaction tax is the better way to go. After all, it would be the banks that are paying the largest share, which is only fair as they make thier profits from our money.

GST. Once and for all, you are wrong.

GST is only paid once, and that's by the end user. All other gst payments are credited back to the payee.

Example.
I buy a cow, $250, I pay $25 gst. The farmer pays this $25 to the government, iI then claim it back.

I buy $300 worth of goods and services and pay $30 gst. This $30 is paid to the government, then I claim it back.

I sell it as meat and there is no gst.

However, if I sell it to a restuarant, they cokk it and charge gst. That gst is paid to the government and they keep it, unless of cause I take my staff out for dinner, then I pay the gst, the restuarant pays it to the government then I claim it back.

Every cent of gst paid in the process of doing business is paid by the recipient then claimed back by the payee.

The government does have contol of this money for up to 90 days, but that's it.

It is not a tax on tax, that's a smeer campaign, and a very good one at that.

rehctub, We need new Govt banks to create the money to equal our increases in GDP.$8000 per working person is created as debt by private banks to equal increases in GDP + inflation when in fact it shoulf be created as a tax credit.So we are paying $16,000 + interest pa per working person to private banks for productivity we already should own.We could reduce our taxes if we could free ourselves form this Globalist monopoly of banksters.

I've tended to ignore your more recent cut'n'paste diatribes against the Globalist monopoly of banksters, Arjay.

But there was something about the wording of this that caught my eye.

>>So we are paying $16,000 + interest pa per working person to private banks for productivity we already should own<<

How does that work, exactly? Who gets the money, and what does the working person get in return? Because I've looked at my bank account, and I can't see "$16,000 + interest" leaking out of it.

I can certainly understand that we pay interest on our home loans somewhere in that order of magnitude - your figure of $16k per working person adds up to around $180 billion, or about 17% of gross household income.

But what's this stuff about "productivity we already should own"?

You will take a moment to explain, won't you.

to those who say we got a transaction tax...[ie gst]
please why are you deluding?

gst..is a tax on service providerrs and goods
trabsaction tax is on EVERY TRANSACTION
like those day traiters day trading with billions..speculating up the price of our goods..or moving trillions into overseas markets..[tax free globally]

you know those elites who want taxes on the little guys
not the big snakes...who want a fixed fee for use of banking accounts...while they freely move massive ammounts for relitivly nothing

[say i buy a 25 dollar meal
i pay the same fee as those fools moving 25 billion every night]

yes drop all other taxes on the poor
as well as bank fees

and yes bring on a transaction tax
on every transaction...

[but the elites running the scams on the poor wont ever let that happen]..so were wasting time even talking about it..!

its about keeping the ritch richer
and making the comfortble ..uncomfortable..[and eventually..poor]

just like inflation is about stealing value
devalueing the worth of every dollar..till in the end its worth cents