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!