Taxes inevitably rise, even when a government says it wants lower taxes. Perhaps that’s code for lower tax rises than the opposition?
Anyhow, yesterday the Treasurer said
We aim for lower, simpler and fairer taxes
Today the Treasurers meeting (Council on Federal Financial Relations Tax Reform Workshop) issued a communique that said that they had agreed
That any revenue arrangements need to be simple, efficient and sustainable.
What happened to ‘lower’?
The Treasurers also agreed to lower the $1000 threshold for collecting GST. The devil will be in the detail, but we need to be very cautious about such a move. Recently I purchased from overseas an item priced at AUD $2150. I had to pay duties and fees of $389.45, comprising:
- General tariff 5% = $107.50
- GST (on the $2150 + $107.50) = $225.75
- Import Declaration Air Charge (goods less than $10,000) = $40.20
- AQIS entry charge = $16.
That’s an effective tax rate of 18.1%.
If I had bought the item for less than $1000 I would not have paid any duties and fees.
But what of the Governments’ decision? Since there are two fixed charges (import declaration charge and AQIS entry charge) the effective tax rate for low value items could be much higher. So if the item was priced at $200, for example, and subject to the 5% tariff, the total fees and charges would be $87.20, which is 43.6%.
Will this increase competition in Australia? Certainly not!