Yabby - I hear what you're saying. But the same argument could be made about any of my discretionary spending. If there was no GST on anything, we'd all have more money that we could invest in our super.

So why is share trading special?

According to the ATO, share trades are classified as 'financial supplies' along with bank loans, credit cards etc. Financial supplies are GST exempt.

Going back to my earlier post, I could (maybe) accept that logic as it applies to initial share floats and new releases of shares, because in those situations money is actually flowing to a business.

But for regular share trading, the money spent is buying a stake in a corporation from another person who already owns that stake. It's a straight purchase, not a loan.

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So a smart guy like me could come along, open an exchange for Aussie shares in Singapore, all smart money would use it and save themselves a fortune. I would become rich and many Australians would lose their jobs. Smart thinking for Australia ?

Shares are not goods so the "G" in GST doesn't apply.

Stamp duty, tho', now there's a chance to pull some dosh. It was abolished on share purchases with the intro of the GST, while it still sits like a dead-weight on property.

Why?

I would suggest that the majority of trades are made by companies that are registered for GST, therefore they would claim their GST back.

A very small transaction tax would be a much better option.

Has any of the economic geniuses on this site even considered why no country in the world has taxed transactions or financial instruments?

The answer is simple, transactions can theoretically take place anywhere, for example I can buy shares in BHP in Sydney or in london from my computer at home. If Aus has a transaction tax, I, and most others would be stupid to use a Sydney account, and the local stock exchange would collapse. Businesses would simply not use local banks, local employment would shrivel and the ATO would collect far less taxes than they do now.

A prime example of this is in the EU where London has the lowest cost of transaction and does more business than the rest of the EU put together.

Irrespective of what you think should be done with GST there is one thing that is certain: If the Coalition get back in after the election they will raise the GST from 10% to 15%.