John Passant writing in the Canberra Times.
The usual bourgeois wet dreams about removing the exemption on fresh food, education, child care and health from the GST came up, as did increasing the rate. One suggestion was moving it from its current 10 per cent to 20 per cent.
While increasing the GST rate or expanding the base has many fans in Australia few of them occupy, or run for, public office.
Advocating an increase in the GST rate is a call to skin taxpayers alive. It should always be resisted (except in some very unlikely situations).
When the GST was introduced it replaced a raft of inefficient state taxes and the Wholesale Sales Tax. With minor exceptions (wine and expensive cars) these taxes were not reformed, they were abolished. If anything we can criticise the Howard government for being too timid – but at the time it was a huge gamble and they nearly lost the 1998 election (and for a while it looked like they would lose the 2001 election). The other point to remember was that the Howard government introduced the GST from a position of fiscal strength. They didn’t need the money – furthermore all the GST revenue was given to the States. So the Federal government has no incentive to increase the rate or change the base (as they bear all the political costs of doing so).
Modifying the GST is something a lot of people talk about – it is a lazy policy solution to the need to cut spending or to re-prioritise existing spending choices.
The GST is a very efficient tax – it has the potential to raise a lot of money – and once it gets out of the political straight jacket imposed by the Howard government it will quickly increase to European levels. So changes to the GST must be matched with the abolition of existing taxes and not be source of new revenue or allow government to avoid tough spending choices.
Except online enables GST to be either avoided or evaded. Combine with high dollar & GST base could eroded to point it is only the “ST” !
Jack
18 Jul 12 at 6:52 pm
The GST’s biggest problem is it is less visible than income tax (or BAS). You have to fill in an annoying form. So Gillard pulled a swifty in this budget by raising the threshold to $18,201. That way the demographic she is targeting don’t see the pain of income tax, and lose the wariness about big government, which becomes a sugar daddy. Bad bad stuff.
Tax should be pain, to remind us, as per Colbert’s words.
Bruce
18 Jul 12 at 6:53 pm
Jack
Would you be able to tell me how far the black economy has expanded with the growth of online sales and appreciation of the dollar, and if it actually lowers net GST collection?
.
18 Jul 12 at 6:55 pm
Online sales from overseas represent 3/5ths of SFA. Although I do hope they grow to a point where local gouge merchants are destroyed.
Infidel Tiger
18 Jul 12 at 6:58 pm
The only ‘bourgeois’ calling for this are those from the Grattan Institute. The bigger issue with Passant’s op-ed is that he ignores that higher income earners’ share of total tax revenue has increased since 1995-96. So more blah, blah, blah filling up Fairfax’s column inches…
Sleetmute
18 Jul 12 at 7:30 pm
Sorry to tell you but the GST has already been increased, it is known as the Carbon (Energy Consumption) Tax.
This increase in the GST has the benefit of the revenue going to the federal government rather than those pesky states that deliver all the services. The funds can now be redistributed to pork barrel desired electorates, compensate union dominated industries and redistribute income from undesirable income brackets.
If the original GST was simply increased people would scream blue murder as it was a breach of an initial condition of establishment of the tax. However, just change its name, say it is necessary to stop the world blowing up because of an extra 0.0038 degree, pay some rent seeking scientists (prostitutes in lab coats) and you can just about rort your way to an unexpected election victory.
Le Chiffre
18 Jul 12 at 7:54 pm
I wonder if the leftists will wet their pants when the carbon tax base, the Misfortune 500, is expanded to cope with crashing permit prices?
Of course that assumes Tony Abbott won’t be prime minister by then… lol…
ar
18 Jul 12 at 8:05 pm
F-me. There is an epidemic mental illness known as leftism, in this country. How does monsieur passant not know that taxing everyone above a set level will instantly eliminate all economic activity of those people above that level. Who does he think is actually dumber than himself that they will continue to work, risk, create and employ; knowing that 100% of the rewards from this effort will be confiscated. I am aghast.
Le Chiffre
18 Jul 12 at 8:18 pm
I am pretty sure you can get a Ph D in whatever the fuck you want as long as you have a sympathetic supervisor.
This dude is off his beam. He thinks the entire justice system is not just at all (actually impossible) because we are a somewhat capitalistic society.
That’s right, because a baker can save and open his own shop with a loan and work for himself or give someone else a job, every court trial is unfair – unless we adopt the Soviet system.
He needs his head examined. Seriously.
хищнический убой скота
Maybe Passant can figure out what “the malicious slaughtering of livestock” refers to. Hint: it wasn’t done by wealthy capitalists, but peasants.
.
18 Jul 12 at 8:23 pm
Le Chiffre, the carbon tax is more like the WST than the GST. Grossly inefficient.
If it was like the GST it wouldn’t penalise the production of export goods compared with imports, requiring all kinds of special treatment.
If it was like the GST it would be easy to see the carbon tax cost on your bill. Instead it is built into the margins (and applicable GST) of the product all the way down the supply chain. I disagree with Bruce, the GST is quite visible and transparent.
Even if you thought it imperative to tax carbon, the Gillard version is total crap. It doesn’t even achieve its stated policy goal.
Entropy
18 Jul 12 at 8:23 pm
Entropy,
If Gillard’s carbon tax was used globally to cut emissions to zero, we’d reach zero GDP before we reached 100% mitigation. That’s how inefficient it is.
Simply allowing nuclear energy to exist/compete with fossil fuels by removing the regulatory bias would do more than this woeful tax.
.
18 Jul 12 at 8:24 pm
BTW, what sort of a clown college would employ that compulsive letter writer to bother innocent young minds with his rantings?
Entropy
18 Jul 12 at 8:25 pm
Jack, under the One Nation Taxation policy it is impossible to avoid paying tax with on-line purchases.
The Transaction Tax system that One Nation is promoting was developed by Economics Professor Edgar L. Fiegel and presented to the US Tax Summit during the last decade.
In simple words all current federal taxes & excises(around 130) would be abolished and replaced with one simple tax only.
The transaction tax would tax everyone (including businesses) at a nominated rate (One Nation is promoting a 1% rate)on every single transaction.
As an example, if you currently earn $1000 per week you would have paid $119 in tax (figures based on tax scale prior to July 1).
Under the Transaction Tax system you would be taxed $10 (1% of $1000) on deposit into your account and 1% on the money you withdrew from your account. If you withdrew the whole amount of $1000 then your tax bill on this would also be $10.
Obviously the tax is more complicated than this example but in real terms it is a simple tax where the more money you earn or spend the more tax you pay.
Over the coming months we will have a more detailed outline on the tax and of course, full costings to promote the tax.
As Interim Policy Co-Ordinator for One Nation’s Victorian branch i have studied this tax concept thoroughly and know that it is a legitimate taxation model. After all it was developed by an economics professor. There are several other models being promoted within Australia and indeed the world but we have found Fiegel’s model best suited to Australia’s need.
Mark Humphrey /One Nation
18 Jul 12 at 8:27 pm
Would One Nation even allow us to purchase foreign goods?
Infidel Tiger
18 Jul 12 at 8:30 pm
I am NOT pro debit tax but I want a decent demolition of it.
I have never seen any economist actually tear it apart like they do tariffs.
I don’t like one nation because they are socialists. I have figured out their desired tax/GDP ratio is about 50%.
Thus, we could cut a debits tax down to about 0.33% or 0.25% of turnover.
Mark
My preference is for a low rated VAT capped at 10%, a royalties system like the WA system capped at 5% and a LVT on UCV capped at 2%.
Surely this is simple enough and the changeover will be simple?
.
18 Jul 12 at 8:37 pm
Passant is regarded as some sort of sage, a grey eminence in the landscape down there, in that ornamental goldfish bowl that is Canberra. But apart from the issues around the GST, a dispassionate assessment of the amount of tax paid by wealthy individuals and companies would cut the ground from under him, as is usual with this sort of marxist smoke dream.
blogstrop
18 Jul 12 at 8:57 pm
John Passant is a Marxist and makes no bones about it. So he should seen in that context. When last I heard he was a senior lecturer at UC so being a tutor is a huge step down. For his sake I hope that is voluntary change.
Sinclair Davidson
18 Jul 12 at 9:06 pm
I do not see Marxists as employable. They are kooks.
.
18 Jul 12 at 9:08 pm
Anyone who takes monsieur peasant seriously is as braindead as he is.
Rabz
18 Jul 12 at 9:12 pm
Let’s just abolish income tax and then after a year or two figure out if any other taxes really do need adjusting or not. Some may see it as fiscally reckless but I think it would be kind of neat.
TerjeP
18 Jul 12 at 9:23 pm
Passant is a Trotskyite – probably now in his late fifties – who is a chronic writer of letters to the Canberra Times as well as a periodic paid contributor – in the Nineties he actually wrote a weekly column. Professionally, he moves around a lot: He was at ANU, then for a while senior tax lawyer at ATO, then a lecturer at the University of Canberra. I’m not sure, BTW, whether moving from a lecturer at UC to a tutor at ANU is an upward or downward career move, but he certainly seems to have contacts.
Despite his Marxist-Leninism, much of Passant’s stuff seems to be about protecting the priviledges of academics and public servants – white collar staff on taxpayer-funded incomes, people like himself. He wants, for example, to preserve the current expensive and elitist tutorial system at the ANU School of Music and he is often banging on about the poor pay and conditions of ACT public servants – that’s people who work for the Territory government and in my experience a group so collectively lazy and incompetent that Lenin or Trotsky would almost certainly had them shot for sabotage! He seem to combine a rather rigid and unsubtle Marxism with an eclectic populism.
As he tells CT readers, he has a blog, but it’s pretty much Trotskyite boilerplate.
Des Deskperson
18 Jul 12 at 9:34 pm
Big surprise. I wonder how much “justice” he dished out, by undermining capitalism?
.
18 Jul 12 at 9:44 pm
And he pontificates ad nauseam on a Facebook site called The Middle Ground – Australian Labor Party vs Liberal Party debate forum. He pretty much has taken over the forum and preaches to all and sundry. Pathetic really.
Gab
18 Jul 12 at 9:47 pm
I’d welcome an expansion of GST to remove all exclusions and an increase to 20% provided income tax is completely abolished.
big dumb fu
18 Jul 12 at 9:57 pm
Sorry about the slow link up
Mark Humphrey /One Nation
18 Jul 12 at 10:00 pm
Has anyone else noticed that other than The Drun the only place that publishes this communist crap is the Canberra Times? It speaks volumes about its audience amonst the brown cardie clad brigade in the nation’s administrative capital.
Marlene Nguyen
18 Jul 12 at 10:03 pm
Yes we could cut the tax rate to .33% but that would cover the existing needs.
At 1% the government would have $billions of excess funds to invest in a series of infrastructure projects, pay back foreign debt,manufacturing,free health, education & TAFE.
If the normal worker is only paying about 20 bucks in tax why would we drop the rate to .33%
There is work being done on the rate for institutions who deal in money transfers daily. This may well be at a reduced rate but not confirmed.
I would also like someone to pick this tax to bits but no-one wants to do it. Don’t forget that this model was presented to the US government. You would have thought that would have been the opportunity to pick holes in the concept.
I think one reason behind the hush hush is that the reliance on the world bank/IMF by governments would be severely reduced.
Maybe it’s better for no promotion at all from these groups.
Mark Humphrey /One Nation
18 Jul 12 at 10:20 pm
You don’t understand what “foreign debt” actually is.
That spending is wasteful. If I’m only going to pay $20 tax, I’ve got more than enough to spend on health and education.
.
18 Jul 12 at 10:22 pm
Infidel Tiger, if i had the money i would buy a couple of foreign vehicles tomorrow.
In fact i have had goods manufactured in a foreign country before.
So go ahead and purchase what you want from OS.
No prob
Mark Humphrey /One Nation
18 Jul 12 at 10:33 pm
You don’t understand what “foreign debt” actually is.
That spending is wasteful. If I’m only going to pay $20 tax, I’ve got more than enough to spend on health and education.
You forgot SAVINGS,re-paying debt etc etc
Mark Humphrey /One Nation
18 Jul 12 at 10:37 pm
Why does the Government need to save? It owns a HEAP of land and can buy insurance, and issue bonds on the short term.
Debt repayment unfortunately needs to be undertaken.
.
18 Jul 12 at 10:40 pm
An inefficient tax is a good tax. Efficient taxes lead to higher taxes and larger governments
Buchanan and Brennan wrote The Power to Tax: their message was if you don’t always trust governments, beware of efficient taxes. Efficient taxes make it easier for government to extract more revenue from the population with less political resistance.
When Brennan said at a tax reform conference in Australia 20 years ago or so that more efficient taxes and tax reform are bad because they lead to higher taxes, no one understood him.
Idealists all, the audience assumed they were advising a benevolent government, not a size maximising leviathan – a beast that needs to be staved with constitutional constraints on tax bases and tax instruments.
Fiscal arrangements are analysed by Buchanan and Brennan in terms of the preferences of citizen-taxpayers who are permitted at a constitutional level of choice to select the fiscal institutions they are to be subject over an uncertain future.
Those in elected office are assumed to exploit the power assigned to them to the maximum possible extent: government is a revenue-maximizing Leviathan.
Tax reforms saved the modern welfare state by raising the same or more revenue with less taxpayer resistance.
Taxes are very efficient in the Nordic countries – high taxes on labour income and consumption, and lower taxes on capital income and relatively light regulation of goods and labour markets.
Jim Rose
18 Jul 12 at 10:54 pm
Gillard is in trouble if she can’t count on the Marxist vote!
Rebel with cause
18 Jul 12 at 11:00 pm
Why do you treat this as gospel?
Before the US had income taxes, they had low tax to GDP ratios and seemingly efficient taxes – low tariffs and some property taxes and excise.
Would you be opposed to my preferred tax policy for the LDP?
A replication of the WA royalties system for all onshore and offshore mining, fishing* etc capped at 5%.
A LVT on UCV capped at 2%.
A VAT capped at 10% with no exemptions and
no other taxes allowed, I’d even go for constitutional change if that’s what it takes to keep the beast starved and locked up in a dungeon.
* I find this preferable to quotas, which should be determined by regional trusts rather than centralised Governments.
.
18 Jul 12 at 11:01 pm
dot, traditional public-finance advises governments how to maximize revenues: how to pluck the goose to obtain the most feathers with the least hissing.
political constraints were ignored in the determination of tax policy and policymakers were assumed to be driven solely by the desire to do good as the public finance policy advisor would discern it.
there is no point in constitutional rules if those rules only prevent wholly benevolent persons from doing good.
which model is the appropriate one on which to have a reasoned discussion of constitutional alternatives.
Jim Rose
18 Jul 12 at 11:09 pm
I reckon my tax model would collect around 15% of GDP. That’s enough for a moderately libertarian regime with social welfare schemes such as a NIT and school vouchers.
.
18 Jul 12 at 11:23 pm
10%. Remember that Milt always said 10% is more than enough.
JC
18 Jul 12 at 11:35 pm
5% for a libertarian
10% for a conservative
15% for a raging lefty
.
18 Jul 12 at 11:36 pm
20% for a Stalinist lunatic.
JC
18 Jul 12 at 11:39 pm
Read more: http://www.canberratimes.com.au/opinion/the-wealthy-are-a-taxing-problem-20120717-228n5.html#ixzz20zOiuNfw
You’ve got to be kidding.
JC
19 Jul 12 at 1:42 am
I think I would be in favor of a 30% economy wide GST on the following basis:
1. It is used to fund 100% of local, state and federal government requirements.
2. Every other tax, duty, impost, levy and tariff charged at every level of government is abolished.
3. The constitution is amended to say that this is the only way government can raise money apart from borrowing and that the government cannot budget for 2 consecutive deficits in a row without asking the public for permission. If 2 consecutive deficits are actually delivered without public permission then the Government is automatically sacked.
Imagine how much you could do with 100% of your income. Imagine the red tap savings for everyone including business. Imagine cutting the ATO from 28500 staff down to 2000 staff. Imagine how many other APS positions could be abolished under such an arrangement. Imagine the massive savings for state and local government.
It could work and it would have the benefit of forcing the total size of the combined federal, state and local governments to be capped at 30% of GST.
Of course a 25% GST would be better still.
John Comnenus
19 Jul 12 at 6:37 am
When the GST was introduced to replace certain State taxes, I seem to remember the NSW Labor government took the money, but then didn’t fully abolish the State taxes anyway.
The Old and Unimproved Dave
19 Jul 12 at 7:35 am
GST @ 60% and zero income tax?….yes please.
Alfonso
19 Jul 12 at 7:45 am
You’re right Dave – and they wondered why their credibility went downhill.
Winston SMITH
19 Jul 12 at 8:48 am
Dave: no state can guarantee they’ll get their GST back, so no prudent state would eliminate all other income.
wreckage
19 Jul 12 at 9:11 am
If total Government spending is 30% of the economy, then a GST of 43% would suffice for Commenus’ plan.
However. I believe there is total and utter waste in Government. The GST under such a plan should be capped at 20% and cannot be changed without a constitutional referenda.
Then we can bring spending down to a libertarian leaning but socialistic and redistributive 16% of GDP.
.
19 Jul 12 at 9:15 am
“If total Government spending is 30% of the economy, then a GST of 43% would suffice for Commenus’ plan.
However. I believe there is total and utter waste in Government. The GST under such a plan should be capped at 20% and cannot be changed without a constitutional referenda.
Then we can bring spending down to a libertarian leaning but socialistic and redistributive 16% of GDP.”
Wouldn’t the GDP be affected by tax rate adjustments?
The % of tax v GDP would surely alter if the consumer had more or less disposable cash on hand.
How could you forecast what the eventual GDP v Tax would be?
43%,30%,25% GST. Fantastic guys, that would certainly help our manufacturing, agricultural and export industries against low cost producers.
The battler in the streets all of a sudden is paying 43% more for their power,water,fuel,food. That’s ok though as they don’t pay other taxes. What other taxes? Oh income tax.
The small business will benefit as well i guess. 43% on top of everything! No tax for other things but 43% on top of everything.
Dream on.
In order to compete on the world stage we need to reduce costs not inflate them. This i thought is simple mathematics.
Mark Humphrey/One Nation
19 Jul 12 at 8:26 pm
You forgot SAVINGS,re-paying debt etc etc
Why does the Government need to save? It owns a HEAP of land and can buy insurance, and issue bonds on the short term.
Debt repayment unfortunately needs to be undertaken
Government issued bonds on the short term eventually have to be paid.
What do they do then. Just borrow more money and create more debt?
Mark Humphrey/One Nation
19 Jul 12 at 8:32 pm
You simply have no idea how many taxes we pay. It is actually worse than paying a 43% consumption tax.
The idea is that the revenue fluctuates around growth, not matching growth exactly. Swings and roundabouts.
.
19 Jul 12 at 10:53 pm
Glad to see I could give some of you a little pleasure in your otherwise miserable and dreary lives. And yes being a tutor at ANU is a step up from that miserable ‘university’ called the University of Canberra. Just ask John McLaren, Sinclair.By the way, Trotskyite is a term of Stalinist abuse. It is comforting that the nomenklatura here use it.
John Passant
30 Aug 12 at 1:25 am
Passant writing in the Canbera Times? Makes a change from his ramblings on Facebook.
Gab
30 Aug 12 at 1:32 am