Sorry, I was not advocating business pay tax on gross income, I was responding to individuals post. I was just pointing out a flaw in the system which makes housing less affordable to those entering the market for owner/occupiers.

Phooey,
You have not answered my question about using the incorrect term. These business costs do not directly reduce ones tax they reduce the taxable income. As long as we have income tax these costs are legitimite income deductions. Same as employees can claim protective clothing, etc. against taxable income.

I am not saying income tax is flawless, but maybe you should be argueing for doing away with income tax and increasing, say, GST. Everyone is a consumer.

Individual,
You are saying that a busness person should not be able to deduct cost of rent on business premises or the leasing/servicing of expensive equipment he uses to generate income? Are wages paid legitimate busness expenses or should he pay tax on that, as well as the employee?

As I said before I'm not advocating anything, just pointing out a flaw that some may not be aware of. OK tax deduction may be not the correct term, but when the business is an investment property, negative gearing is.

A rose by any other name.

Phooey,
I couldn't make the unpleasant end of the digestive system as a businessman & yes you're right, business is demand & supply. That in itself is perfectly normal. I want something you make & I buy it off you.
Where the trouble is that as more & more people buy that off you, you start getting things at a cheaper rate because of our increased demand yet your price remains the same. You make more profit. Still perfectly ok with me. But then you realise you can get your supplies even cheaper from another country which then leaves your local supplier in the lurch. You however, profit even more because you can exploit the poor bloke who works for next to nothing which doesn't bother you because you're making a quid. Your local supplier then has to increase his prices because you left a gap in his income. He's paying autralian rate of tax as you do but your expenses are now negligible.
You now have created an imbalance in Australia.
I don't however blame the australian businessman because he in turn has to let himself get exploited so the 50% of Public servants can earn almost as much as he does but without the effort of producing. In all fairness at least 10% of them are employed in essential services but that still leaves a helluva lot of people not producing any revenue other than giving back some tax which they then receive back threefold in value when they retire.
So, who is wrecking our economy ?

I think it is not so much who is wrecking the economy as what - complexity. The tax system involves too many components. Taxpayers can barely understand their own position, let alone if they are getting a fair deal in the wider picture.

The supply of houses is quite fixed, moreso than any other expense we have with the possible exception of food. It is also our largest expense. Therefore any increase in this will be felt most by working people saving for first home and rentpayers (sometimes one in the same). With income tax %ages for high earners reducing more than low earners in recent years due to the introduction of GST (which is also deductable in some circumstances) this system is penalising them more than others. Carbon tax will exagerate this even more.

The tax system contains many flaws, its just a shame these flaws most negatively effect those who don't fully understand it (working people,those paying rent), which makes me wonder if they are "flaws" at all.

In my book our tax system is one big flaw because of it's imbalance due to the many tax brackets. Bracketing is a most unfair way of getting money out of people. A common rate is what's needed. You'd be surprised how many of those "successful" enterpreneurs wouldn't be able to hold a chook raffle without being allowed to exploit the flawed system.
Tax deductible consumption in my book would only exacerbate the bad system now. It would make more sense not to need a deduction in the first place i.e. keep the taxes down so you need to use more money to claim it back again later.
If people still insist to import goods which are already available here then a levy should be paid to help fund essential services such as a National Service, Policing, Health & Pension etc.
It won't be too long now & our Governments will realise that the present system is severely flawed.