You do know that an increase in the GST from 10% to 12.5% would mean a 25% increase in tax revenue

At the moment the GST is 10%. On $1000 there is therefore a tax of $100. If the tax is raised to 12.5%, on $1000 the tax would be $125. $125 is 25% higher than $100. The increase is not 2.5%. It is 25%. We would be mad to allow this to happen. Which brings me to this in today’s paper: Lifting GST rate is critical for meaningful tax reform, economists say.

Reforming the GST, including lifting the rate to 12.5 per cent, is critical to boosting economic and productivity growth and could raise between $14bn and $40bn a year, consulting firm PwC says.

This is the same kind of expertise that forecast thousands of deaths from the coronavirus. Do not go anywhere near allowing anyone, State or Federal, to raise our taxes. Let me quote Judy Sloan, also in The Oz today: Don’t waste time on tax: It’s spending that matters. Here Judy is referring to the advice from “former department head Jane Halton”:

Unless the GST or other taxes are increased [Ms Halton says] we won’t be able to afford the public services we apparently all desire. We are approaching a cliff, according to her, and unless something is done, devastation awaits. This is a common refrain from the Canberra bubble.

Judy concludes:

The real pity is that there haven’t been many (any?) reports about expenditure reform. The billions of dollars of government spending that are just wasted and the broader failure to achieve the stated objectives of programs — now those are issues worth considering.

Do not let anyone raise our taxes. We would be mad to let them do anything that allows governments to waste even more money than they already do.

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29 Responses to You do know that an increase in the GST from 10% to 12.5% would mean a 25% increase in tax revenue

  1. Crossie

    Do not let anyone raise our taxes. We would be mad to let them do anything that allows governments to waste even more money than they already do.

    How else can they keep the lockdowns going and finance the Jobkeeper scheme?

  2. John Dee

    How else can they keep the lockdowns going and finance the Jobkeeper scheme?
    This is unfortunately so common.
    Governments have no money save (sorry!) what they steal from us.
    There is no “they” .
    How else can we keep the lockdowns going and finance the Jobkeeper scheme?
    Fixed.
    FFS – why would we even consider it?

  3. Entropy

    One thing the feds of recent times is very bad at is announcing major spending programs with a very dollar figure that sounds impressive in the press release, and then start working out what it will actually do.
    A more rational approach would be to work out what you want to do, then work out how much that will cost. I guess they don’t know how to do that, given how woeful the feds are at program delivery.

    Thing is, let’s say they announce a $2 billion program for say, bushfire recovery. But as the program rolls out it’s becomes clear that even with the ludicrously generous eligibility criteria there just aren’t actually enough people in the target group (say direct fire impacts) to spend that amount of money. So, money saved right? No. That isn’t how government works.

    Not spending the money and improving the budget is seen as a greater sin than working out new and even more wasteful ways of spending it.

  4. Bruce

    The way the GST is applied, with all the “exemptions” and fiddly bits, it was a “make-work” for the bean-counters.

    If a “taxation” system is sufficiently complex that it requires people to endure four years at a university to vaguely comprehend it, it is utterly corrupt.

    The GST may have ousted the creaky old “sales-tax” system, but it simply swapped one set of juggling clubs for another.

    Is the war that “justified” Federal income tax over yet?

    My old sources within the ATO told me years ago that IF a GST were to be introduced, and if it were set at 5% AND there were NO exemptions, for ANYBODY, EVERY other tax and excise could have been dumped. And a LOT of bean-counters and hot-shot lawyers would have been out of work. I don’t have the resources to verify, or otherwise, such a claim, but it struck me that SOMEBODY had spent some time doing some serious number-crunching to even suggest such a thing.

  5. flyingduk

    They are coming for your money, all of it, by whatever means necessary, be it direct taxation, indirect taxation or inflation, they are coming for all of it.

    Buy guns, gold n bitcoin.

  6. John Bayley

    The billions of dollars of government spending that are just wasted and the broader failure to achieve the stated objectives of programs — now those are issues worth considering.

    I am quite convinced by now that at least 95% of government spending is either entirely unnecessary or, worse, used to make life ever more difficult for the productive sector.

    I am also, however, quite certain that it will get much worse yet. If anyone here read the cr*p emitted by that old Marxist ‘economist’ Bill Mitchell at The Weekend Australian regarding the wonders of ‘MMT’, you will know what I mean. Because, you know, ‘capitalism has failed’.

    I’m certain that nothing but a total crash of the current system may lead to any meaningful reform, however. And even then, the sheeple will look to their ‘betters’ – technocrats and politicians – to ‘lead’ them out of it, instead of getting their pitchforks and rope ready.

  7. John Bayley

    Buy guns, gold n bitcoin.

    Someone here gets it.
    Just add food and a block of land, capable of growing veggies, somewhere in WoopWoop.

  8. Louis Litt

    FMD- the problem is government spending- the nbn roll out – Australia is going to be covered in 3 yrs. FM – Conroy and Rudd came up with this pile of shit. It is redundant with 4 & 5 G.Some one on this blog mentioned the Sydney mono rail. Aussie businesses are pretty good when you consider the hurdles that are placeEd in front of them.
    The problem is govt employee wages and union wages. The redundancies are a 25% to 50% of a house. And don’t give me that shit about hard working aussies – the public sector is the place to be employee.
    .

  9. HT

    Sadly, many people believe that going from 10% to 12.5% is just a 2.5% increase. I tested this on my 30 something year old son and daughter, and their respective husband and wife. Mathematical literacy is not a strong point in the younger generation.

    Even after I showed them the calculation on my trusty old financial calculator (love my HP12), they still couldn’t comprehend it. Son and daughter are both Registered Nurses by the way, University educated including post grad studies.

  10. Iampeter

    Do not let anyone raise our taxes. We would be mad to let them do anything that allows governments to waste even more money than they already do.


    Unless it’s Trump, in which case print money like no tomorrow for “big and bold” government infrastructure projects, right?

  11. Spurgeon Monkfish III

    Politicians have been itching to increase the GST rate ever since the monumental abortion was introduced. I’m surprised it’s not already around 17.5% (as it is in other socialist shitholes).

    Previously, I would have predicted the most likely scenario resulting in an increase would be if labore ended up in government federally and in all states (a nightmare scenario which has already nearly eventuated).

    Now it’s just a bunch of grasping incompetent squandermonkeys of all stripes desperate to jack it up. An increase is inevitable and soon.

    Just don’t expect (as Dame Judith has noted) any “discussion” whatsoever of government expenditure reductions, the most obvious and necessary of which would be obliterating the frigging ALPBC.

  12. Angus Black

    Unless the GST or other taxes are increased [Ms Halton says] we won’t be able to afford the public services we apparently all desire.

    How could anyone get the idea the we all (?) desire a large public service???

    There must be some one in the public service doing something useful. I wonder who it is…

  13. Dr Faustus

    Unless it’s Trump, in which case print money like no tomorrow for “big and bold” government infrastructure projects, right?

    It’s almost as if you had never heard of the House Democrat’s Invest in America Act.

    I’m starting to think you could actually be an agent of the Left.

  14. Ed Case

    Why not tax incomes over, say, $200k, at say, 80%.
    Give that a go for ten years and review the results.

  15. H B Bear

    Gargooglery, this is one of your stupidest socks yet. Time for a change.

  16. Neil

    My old sources within the ATO told me years ago that IF a GST were to be introduced, and if it were set at 5% AND there were NO exemptions, for ANYBODY, EVERY other tax and excise could have been dumped.

    That is an idea worth thinking about. Put the GST on everything and get rid of income tax and the tax department

  17. Alex

    Steve Kates, I thought you might like the animated cartoon on the gravesite of Keynesian Economics on the website below:

    https://d33wjekvz3zs1a.cloudfront.net/wp-content/uploads/2020/03/Keynesian-Economics-Dead.gif

    I’ve had problems including a link within my post in the past so in case it does not show then go to the following.
    d33wjekvz3zs1a.cloudfront.net/wp-content/uploads/2020/03/Keynesian-Economics-Dead.gif

    This was accessed on a site called Armstrong economics which provides an alternate Cats type view of the world.

  18. Botswana O'Hooligan

    Are you trying to test our gullibility for no matter how you look at 2.5% it is still bloody well 2.5% or 2.5 cents in the dollar. Compare apples with apples for an increase of $25 in one thousand dollars is still 2.5%

  19. Alex Davidson

    The political/media/government complex is laying it on thick and fast. Here’s what another of the SMH’s ‘senior economics’ writers had to say about increasing the GST this morning:

    NSW is leading a charge among some state treasurers for major tax reform, including an increase or broadening of the GST, to help boost the economy once coronavirus-related restrictions are eased.

    It is utter nonsense to suggest that increasing and broadening the GST would in any way help boost the economy. What it might boost, in the short term, is the ill-gotten gains of the political class and those on the receiving end of government largesse. Meanwhile the rest of us suffer, just like the way they have behaved over coronavirus.

    Furthermore, if using force to obtain means is such a wonderful idea, (for that is what taxation is – essentially theft), then why don’t we all employ the same methods? If we need food, then why don’t we arm ourselves and simply take it from the supermarket?

    Adjusting the rate of GST does nothing to address the fundamental immorality of taxation, and that’s what we need to be talking about. As others have pointed out, we need to start with the scope of government. Why in this day and age, in a supposedly wealthy first-world country, do we need to have the government handling health and education? Why do we have a system that uses force to provide for individuals who do not wish to take responsibility for their own lives? Etc.

  20. Ed Case

    As others have pointed out, we need to start with the scope of government. Why in this day and age, in a supposedly wealthy first-world country, do we need to have the government handling health and education?

    Let’s look at the scope of Government.
    Australians get taxed at similar rates to the Nordic Nations, without the generous benefits.
    Rather than get out the stick to punish the people on the middle and the bottom who get no say in the endless waves of Government ”Tax Reform”, how about an Inquiry into where all the dosh went?

  21. FelixKruell

    Bruce:

    My old sources within the ATO told me years ago that IF a GST were to be introduced, and if it were set at 5% AND there were NO exemptions, for ANYBODY, EVERY other tax and excise could have been dumped.

    Sorry, the numbers don’t add up. We collect around $65bn in GST each year. That covers around 60% of consumer spending. At 100% of consumer spending, you’re looking at around $100bn a year at 10% GST, and only $50bn at 5% GST. So less revenue than we currently collect.

    And that’s best case, ignoring all the embedded GST already included in some of that 40% of consumer spending not currently subject to GST.

  22. John Bayley

    Adjusting the rate of GST does nothing to address the fundamental immorality of taxation, and that’s what we need to be talking about.

    That, and the even greater immorality of monetary inflation, which, in the ‘MMT’ format, is becoming ever more popular among politicians and the chattering class idiots.

    At least Joe Bloggs does understand somewhat what tax does to his pay packet & spending ability, but he has no comprehension of the fact monetary inflation does exactly the same to his savings.

    As Keynes himself well knew many decades ago, it is the same as outright theft.

  23. John A

    Entropy #3505634, posted on July 7, 2020, at 7:09 am

    One thing the feds of recent times is very bad at is announcing major spending programs with a very dollar figure that sounds impressive in the press release, and then start working out what it will actually do.

    I’m not sure that is merely a recent “innovation.” Rex Connor may have started it, but certainly Rudd and Conroy deliberately did the NBN that way.

    “We need a big number to beat the government’s internet infrastructure policy” (costed responsibly at about 4.3Bn IIRC – JA)
    “OK, let’s go for something really big, say 26Bn, to pluck a figure out of the air.”
    “Nah, let’s make it about ten times their number – that’d be 42Bn.”
    Ooh, yeah, that sounds pretty good. Sounds like we’re serious and ten times better than them. Right-oh, now how will we do it?”
    “Don’t worry, we’ll figure it out later. Give it to the policy wonks to put some good techy words to it, and we can release it in a week or so.”

  24. Bob

    Not so sure about that. So long as it’s inextricably tied to cementing lower income taxes and lower super taxes, and not introducing new taxes, I don’t mind it. Firstly it recaptures some of the obscene handout money given to lazy whingers and panhandlers in our community. It recaptures the top end tax evaders who run our ASX 200 or are retired on zillions spending madly. And it incentivises people to seek lower prices (= lower GST paid). Well worth considering.

  25. Professor Fred Lenin

    Reform the GST , cut it to 5per cent ,make up the shortfall by cutting government spending and public servant numbers . There fixed that problem .

  26. Speedbox

    …..trusty old financial calculator (love my HP12)

    I’ve got one of those. A 12C. Been using it for many years.

  27. Roberto

    Basic arithmetic. Nobody under the age of 50 can do it anymore.

  28. Squirrel

    It’s not just about expenditure reform – which should be happening in all three levels of government – it’s also about regulatory and other reforms to free up economic activity.

    Without serious attention to those other reforms, the income tax cuts (which the “raise the GST” cheer squad are clearly angling for) will simply mean that the army of overpaid, group-thinking, chair-warming, careerist drones who populate so much of the middle and upper levels of our economy will just get an increase in take-home pay for doing the same mediocre job they’ve always done. The only net benefit to the national economy thus would be for purveyors of luxury goods and other status symbols.

    Might as well leave the money in the hands of the punters – who are more likely to spend it (and on stuff produced locally).

  29. The BigBlueCat

    Unless it’s Trump, in which case print money like no tomorrow for “big and bold” government infrastructure projects, right?

    Do you live in the USA? If not, what relevance is that comment? Please explain.

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