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Ask RiotACT: So, the GST is Going to Increase…?

By rommeldog56 26 November 2015 28

Ask RiotACT

Can anyone answer some of these questions in relation to what appears an almost certain increase in the GST from 10% to 15% :

1) If the prices of goods/services rises, will not the law of demand hold true and generally, sales will decrease? How will that affect projected revenue raised?

2) If tax payers/families/fixed income recipients/self funded retirees, etc are “fully compensated” (as I’ve heard Scott Morrison say), does that mitigate against (1) above?  So, if consumers are fully compensated, where does the extra revenue raised (and given to the States) come from eg. I would think that the extra revenue raised has to come out of consumers back pockets or from company profits?

3) As GST revenue goes to the States/Territories, if the a major component of the “compensation” will be a reduction in income tax rates (which goes to the Federal Government), where does that leave the Federal budget? Will that mean transfer of some or all spending on Health, education, etc, from the Fed’s to the States?

4) Federal Labor’s position and (now Senator) Katy Gallagher: As Chief Minister (now Senator) Katy Gallagher was a strong and vocal supported of increasing the GST (no doubt to help cover the ACTs record Territory budget deficit and the impending b$1 cost of stage 1 of the tram).  So, where does that leave Senator Gallagher’s view now that Federal Labor is opposing the GST increase?

5) When Howard introduced the 10% GST, the States were supposed to get rid of State levied taxes such as Stamp Duty. However, this was never enshrined in law, in a written agreement, etc. So, they didn’t. Will this occur again? If it does, where does that leave the up to tripling of Annual Rates by the ACT Government which is supposed to make up for the reduction in Stamp Duties in Canberra – will/can the ACT Gov’t “double dip” ?

I have an overriding fear that the States/Territories will waste the massive revenue generated – again – rather than invest in infrastructure projects and sustainable job creation and in another 10 years or so, it will be “lets increase the GST to 20%”.

I request enlightenment please.


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Ask RiotACT: So, the GST is Going to Increase…?
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jcitizen 4:32 pm 03 Dec 15

miz said :

JCitizen, it is possible to make anonymous calls to Centrelink and CrimeStoppers to report genuine concerns
http://www.humanservices.gov.au/customer/information/fraud-and-security
http://www.afp.gov.au/contact/crime-stoppers

Tried that but crimestoppers werent interested and a Scottish accent Officer said because it was government housing that it was centerlink’s problem and centerlink said it was a police matter. This guy also got a $180k payout from the Gov for “bullying” when he did work for the public service and has not stopped laughing ever since. He takes the pension and sells to kids………

I do not normally “dob” but this guy is more out of control now than ever before…….

Like i said before…Fix the waste before you slug more taxes and give them to these sort of people….

HenryBG 7:04 am 02 Dec 15

dungfungus said :

The predicted CPI increase never happened.

You might recall the bizarre economy-busting rhetoric emanating at the time from the coal industry’s lackeys.
These irresponsible ideologues were unremittingly talking down the economy, resulting in much lower CPI than would otherwise have been the case, and even the best economists couldn’t find any concrete evidence of what effect the carbon tax was having on CPI (electricity prices were up 15%).

It was interesting that bad leaders with very bad ideas were able (even from opposition) to have a much stronger negative effect on a nation’s economy than the carbon tax did. Especially ironic when you recall that the “big bad tax” was going to destroy the economy…

This country is in such poor intellectual shape that 50% of the elected representatives one of our 2 major parties will not admit that their ideology is far, far more toxic than the carbon tax was.

HenryBG 6:57 am 02 Dec 15

dungfungus said :

HiddenDragon said :

When the current GST was introduced, there was a one-off jump of about 6% in the CPI – so an increase of the GST rate from 10% to 15%, without extending it to other goods and services might produce a CPI rise of about 3% (allowing for the fact that there won’t be any sales taxes to cut this time, but items subject to GST now make up a smaller proportion of the typical household budget).

Compensating for that without spending all the extra revenue or without going the other way (and losing an election) will be a work of art – which may be one of the reasons why this is still (publicly at least) in the realms of the hypothetical.

The recent proposal from Jay Weatherill is interesting, not least because it ties in questions of Commonwealth/State responsibility for some of the big spending programs and thus raises the possibility (however remote) that there might be more than cosmetic changes and the pursuit of real efficiencies in areas of ever-growing demands for increased spending.

It was suggested that the same “one off increase in the CPI” would happen when the carbon tax was introduced. Greg Combet said it would be 2.7% in the first quarter after the introduction of the tax.
The predicted CPI increase never happened.
I think the “one-off jump of 6% in the GST ” actually took 18 months.

Did Combet really say that?
That would be surprising, given that Treasury modelling showed 0.7%, which is quite a bit different from 2.7%…

dungfungus 9:55 pm 01 Dec 15

HiddenDragon said :

When the current GST was introduced, there was a one-off jump of about 6% in the CPI – so an increase of the GST rate from 10% to 15%, without extending it to other goods and services might produce a CPI rise of about 3% (allowing for the fact that there won’t be any sales taxes to cut this time, but items subject to GST now make up a smaller proportion of the typical household budget).

Compensating for that without spending all the extra revenue or without going the other way (and losing an election) will be a work of art – which may be one of the reasons why this is still (publicly at least) in the realms of the hypothetical.

The recent proposal from Jay Weatherill is interesting, not least because it ties in questions of Commonwealth/State responsibility for some of the big spending programs and thus raises the possibility (however remote) that there might be more than cosmetic changes and the pursuit of real efficiencies in areas of ever-growing demands for increased spending.

It was suggested that the same “one off increase in the CPI” would happen when the carbon tax was introduced. Greg Combet said it would be 2.7% in the first quarter after the introduction of the tax.
The predicted CPI increase never happened.
I think the “one-off jump of 6% in the GST ” actually took 18 months.

dungfungus 9:51 pm 01 Dec 15

Garfield said :

dungfungus said :

miz said :

Germany has retained manufacturing, so we could follow that example. And There are plenty of things I never want to buy from OS – food is one of them. It’s madness to be so reliant on imports.

If the Euro collapses (a real possibility thanks to Merkel’s migration policies) Germany manufacturing sector will become uncompetitive with Spain and Italy overnight.

Can you please explain how it will be that when a common currency collapses one of the countries will become less competitive and the other two more competitive? If the Euro collapsed, exports from all those countries would become cheaper, thus increasing demand, and imports into those countries would become more expensive, thus increasing demand for locally produced items. A declining currency boosts local manufacturing.

Exactly.
This is the current problem in the EEC. Countries like Italy want to go back to the lira and France wants the franc again. This way they can devalue their own currencies to make up for the production deficiencies in their labour market and compete with the better structured Germany.

HiddenDragon 7:03 pm 01 Dec 15

When the current GST was introduced, there was a one-off jump of about 6% in the CPI – so an increase of the GST rate from 10% to 15%, without extending it to other goods and services might produce a CPI rise of about 3% (allowing for the fact that there won’t be any sales taxes to cut this time, but items subject to GST now make up a smaller proportion of the typical household budget).

Compensating for that without spending all the extra revenue or without going the other way (and losing an election) will be a work of art – which may be one of the reasons why this is still (publicly at least) in the realms of the hypothetical.

The recent proposal from Jay Weatherill is interesting, not least because it ties in questions of Commonwealth/State responsibility for some of the big spending programs and thus raises the possibility (however remote) that there might be more than cosmetic changes and the pursuit of real efficiencies in areas of ever-growing demands for increased spending.

Garfield 12:28 pm 01 Dec 15

dungfungus said :

miz said :

Germany has retained manufacturing, so we could follow that example. And There are plenty of things I never want to buy from OS – food is one of them. It’s madness to be so reliant on imports.

If the Euro collapses (a real possibility thanks to Merkel’s migration policies) Germany manufacturing sector will become uncompetitive with Spain and Italy overnight.

Can you please explain how it will be that when a common currency collapses one of the countries will become less competitive and the other two more competitive? If the Euro collapsed, exports from all those countries would become cheaper, thus increasing demand, and imports into those countries would become more expensive, thus increasing demand for locally produced items. A declining currency boosts local manufacturing.

dungfungus 10:22 pm 30 Nov 15

HenryBG said :

2604 said :

Look at all of the richest countries in the world – Luxembourg, Switzerland, Singapore, the Netherlands, Scandinavia – all of which are service economies and none of which has any mass manufacturing.

Actually, Germany and Sweden manage to build cars, and they even have aerospace industries.
Comparing Australia to Singapore or Luxembourg is pointless.

2604 said :

Also, our tax base is not “shrinking”. The government has never collected as much tax as it does now.

With the 6th-lowest taxing country in the OECD, I thought it was pretty well accepted that our budget problems were down to the lack of government income.

2604 said :

Tariffs hurt consumers…

Except we’ve established that Australians are very rich…

2604 said :

Even if all imported goods doubled in price overnight, they would nearly all still be much cheaper than their Australian made equivalents.

Assertion. Sounds unlikely, certainly not proven.

2604 said :

People’s standard of living would drop by a huge amount.

…except for all the additional income they’d be receiving, and all the additional government income to be spent on infrastructure and public services, and the reduction in Australia’s welfare and healthcare bills…

You’ve just made another unlikely-sounding assertion…

2604 said :

we aren’t good at manufacturing that stuff and overseas countries can do it cheaper. There used to be around half a dozen car manufacturers in Australia in the 1970s and the majority of cars sold was domestically manufactured, and yet Australians today are much, much wealthier in real terms, despite there being no notable car industry here today.

Australian wealth has been slipping in tandem with our failure to support our industries. The only reason we still appear “wealthy” is the massive influx of foreign money into our real estate market. (not to mention the now-popped resource-bubble.)

Retirees *not* owning their own home is set to double just over the next 10 years, and fall to 2% by 2050.
http://www.brisbanetimes.com.au/queensland/retirees-home-ownership-set-to-plummet-to-2-per-cent-20130821-2sbmu.html

That’s a warning sign of a nation whose economy is in crisis from being stripped bare by dodgy “free trade” deals.

2604 said :

Australia also has one of the highest corporate tax rates in the OECD.

You say that like you almost believe it.
http://taxreview.treasury.gov.au/content/Paper.aspx?doc=html/publications/papers/report/section_5-07.htm
Our corporate tax rate is the same as Germany’s, and less than France and the US.
And yet all three of those countries manage to manufacture cars and to foster an aerospace industry.

The answer to Corporations ripping us off is not to surrender to them, but to assert a bit of leadership and make them pay their fair share of taxes.

France and Germany are now making most of their cars in Eastern Europe and Asia.
It’s all about the cost of labour linked to productivity which is why cars are no longer going to be made in Australia.
The last new French car I purchased was made in Turkey (actually better finish than the same models made in France).

watto23 11:52 am 30 Nov 15

miz said :

I cannot understand why people think everyone wants a ‘tax cut.’ I am glad to pay my fair share of tax and don’t mind if it goes up so long as the money is used to benefit the public good.
Eg, raise the Medicare levy and provide better health services.
However I am not a fan of the GST because it is unfair to thos

I agree. I am happy to pay tax as long as it is spent properly. Taxes should be going into needed services and infrastructure, plus aimed at increasing income. the problem is wealth creation in Australia has very much become a game of see how much tax I can avoid paying, rather than the riskier options of investing in revenue creation, like startups and new business.

Also the arguments about the wealthy people who apparently worked hard fall flat on their face when hard working australian doing vital jobs like nursing, teaching and policing work just as hard and basically work until they can afford to retire vs someone doing a job that leeches off the top earns a lot of money then they leech off the taxpayer, because otherwise what incentive is there to earn that money. If its so tough earning $150k+ a year and paying tax then go do an easier job and earn less. I bet they find it tougher and go back to the cushy high paying job.

HenryBG 10:09 am 30 Nov 15

The GST is a regressive tax and is therefore at face-value an undesirable tax.

Given the current global economic environment, however, and the fact that we pay our leaders $100’s of ,000’s while the corporations that are ripping us off pay their leaders $millions, the GST is an invaluable weapon in our fight against tax-dodging corporations. Bring on 100% GST.

HenryBG 10:05 am 30 Nov 15

2604 said :

Look at all of the richest countries in the world – Luxembourg, Switzerland, Singapore, the Netherlands, Scandinavia – all of which are service economies and none of which has any mass manufacturing.

Actually, Germany and Sweden manage to build cars, and they even have aerospace industries.
Comparing Australia to Singapore or Luxembourg is pointless.

2604 said :

Also, our tax base is not “shrinking”. The government has never collected as much tax as it does now.

With the 6th-lowest taxing country in the OECD, I thought it was pretty well accepted that our budget problems were down to the lack of government income.

2604 said :

Tariffs hurt consumers…

Except we’ve established that Australians are very rich…

2604 said :

Even if all imported goods doubled in price overnight, they would nearly all still be much cheaper than their Australian made equivalents.

Assertion. Sounds unlikely, certainly not proven.

2604 said :

People’s standard of living would drop by a huge amount.

…except for all the additional income they’d be receiving, and all the additional government income to be spent on infrastructure and public services, and the reduction in Australia’s welfare and healthcare bills…

You’ve just made another unlikely-sounding assertion…

2604 said :

we aren’t good at manufacturing that stuff and overseas countries can do it cheaper. There used to be around half a dozen car manufacturers in Australia in the 1970s and the majority of cars sold was domestically manufactured, and yet Australians today are much, much wealthier in real terms, despite there being no notable car industry here today.

Australian wealth has been slipping in tandem with our failure to support our industries. The only reason we still appear “wealthy” is the massive influx of foreign money into our real estate market. (not to mention the now-popped resource-bubble.)

Retirees *not* owning their own home is set to double just over the next 10 years, and fall to 2% by 2050.
http://www.brisbanetimes.com.au/queensland/retirees-home-ownership-set-to-plummet-to-2-per-cent-20130821-2sbmu.html

That’s a warning sign of a nation whose economy is in crisis from being stripped bare by dodgy “free trade” deals.

2604 said :

Australia also has one of the highest corporate tax rates in the OECD.

You say that like you almost believe it.
http://taxreview.treasury.gov.au/content/Paper.aspx?doc=html/publications/papers/report/section_5-07.htm
Our corporate tax rate is the same as Germany’s, and less than France and the US.
And yet all three of those countries manage to manufacture cars and to foster an aerospace industry.

The answer to Corporations ripping us off is not to surrender to them, but to assert a bit of leadership and make them pay their fair share of taxes.

miz 7:23 am 30 Nov 15

JCitizen, it is possible to make anonymous calls to Centrelink and CrimeStoppers to report genuine concerns
http://www.humanservices.gov.au/customer/information/fraud-and-security
http://www.afp.gov.au/contact/crime-stoppers

astrojax 6:49 am 30 Nov 15

what appears an almost certain increase in the GST from 10% to 15%

almost certain, is it? i thought everything was still on the table; and that there is an election due before any such measures passed through the parliament. do you know something we don’t?

dungfungus 6:49 pm 29 Nov 15

No_Nose said :

watto23 said :

dungfungus said :

…..

I think you are turning a blind eye to suit your argument here..

Dungers turning a blind eye to suit his own arguement?

Never!

I second that.

jcitizen 9:48 am 29 Nov 15

Until politicians take responsibility for wasting tax payers hard earned money,eg;

1. the $400,000 dollar “big owl” in Belconnen , that has had several hundred thousand spent on it since its purchase to “maintain it”.
The” twisted metal junk art” near Mitchel , the “rabid sheep” in Kambah etc, etc.

2. the handing of the Disability Pension to those with supposed “mental Health issues”, with no checks or balances in place to make sure that they are not spending “their pay” on drugs, alcohol, gambling or black market enterprises, all of which has created their “Mental Illness” in the first place.
I know of at least 8 people , in Canberra alone, that boast on a daily basis, on how they are “much better off” to get the “pension” than go to work. It supports their ability to get “smashed” by 9am, which they could not do if they had to go to work, which they are quite capable of doing……??? And the ones who have used their pension to set them up with with the ability to purchase small and large scale “grow rooms”, both in Public Housing and privately rented dwellings, resulting in Drug Manufacturing capabilities and networks, right throughout the A.C.T.,which is costing Taxpayers an absolute fortune…..??

3. The public servants that think that because they are public servants, they are entitled to STILL “rort the system” in anyway they can. And because they are receiving such high incomes for what they actually do and for the level of public service they actually provide, neither of which is in inline with the private sector or broader public, seems to give them a false sense of importance and entitlement.
Put simply, if they were in the private sector, running their “enterprises”, they way that they do, they would go broke. Just like the Government is…..????

There are many examples of how the “system” is failing the “ordinary” taxpaying people of this country, that i would get timed out if I mention any more.

The synopsis of this discussion should be about “tightening the leaky boat” rather than overloading it.
In My Opinion…….
JCitizen..

rommeldog56 7:47 am 29 Nov 15

miz said :

However I am not a fan of the GST because it is unfair to those who have no choice but to spend all their money on goods and services. There are many loopholes that can be closed first before having to resort to increasing the GST, which is simply lazy. We’ve had a tax review – let’s implement it.

Yep – it certainly is a lazy solution. Look at the low rate of corporate tax paid by large companies that use those tax loopholes to legally pay less tax. Yes – those are harder to close.

And where is the Henry Review at now ? last I heard, some headline recommendations had been agreed to by Government, but most are largely not implemented.

Yes – raising the GST is certainly the lazy solution – consumers and PAYG tax payers are sitting ducks.

dungfungus 11:21 pm 28 Nov 15

miz said :

Germany has retained manufacturing, so we could follow that example. And There are plenty of things I never want to buy from OS – food is one of them. It’s madness to be so reliant on imports.

If the Euro collapses (a real possibility thanks to Merkel’s migration policies) Germany manufacturing sector will become uncompetitive with Spain and Italy overnight.

miz 8:14 pm 28 Nov 15

Germany has retained manufacturing, so we could follow that example. And There are plenty of things I never want to buy from OS – food is one of them. It’s madness to be so reliant on imports.

2604 11:12 pm 27 Nov 15

HenryBG said :

Yes, but what you’re forgetting is that with all the dodgy “free trade” agreements we’ve signed up to, we are being forced to allow into this country goods that have been produced in the absence of the regulatory framework that exists in this country and which is funded by our taxes – and so those foreign good are cheaper, and so nothing gets made here anymore, and so our tax base shrinks.

The reason “nothing gets made here anymore” is that Australia is moving towards being a service economy. Look at all of the richest countries in the world – Luxembourg, Switzerland, Singapore, the Netherlands, Scandinavia – all of which are service economies and none of which has any mass manufacturing. You can have high minimum wages or a large mass manufacturing sector, but not both. The “regulatory framework” that you talk of is what drives manufacturing jobs out of this country.

Also, our tax base is not “shrinking”. The government has never collected as much tax as it does now.

HenryBG said :

The GST is a significant tilt against the inequities involved in “free trade”. A GST of 100% would be excellent in that respect, and it would bring back a lot of economic activity to this country that has fled offshore.

Tariffs hurt consumers and do nothing to foster sustainable industry. Even if all imported goods doubled in price overnight, they would nearly all still be much cheaper than their Australian made equivalents. People’s standard of living would drop by a huge amount.

HenryBG said :

There is absolutely no excuse for a country of our size to have zero car manufacturing and for our defence budget to be constantly expended on foreign manufacture of weapons systems and platforms.

Yes there is – we aren’t good at manufacturing that stuff and overseas countries can do it cheaper. There used to be around half a dozen car manufacturers in Australia in the 1970s and the majority of cars sold was domestically manufactured, and yet Australians today are much, much wealthier in real terms, despite there being no notable car industry here today.

HenryBG said :

The small proportion of Australians that actually pays taxes is being fleeced by foreign manufacturers and foreign corporations who’ve structured their business to pay no tax here.

Actually, we’re being fleeced by politicians who have structured the tax system so that welfare recipients and wealthy retirees who own their own homes pay no tax here.

Australia also has one of the highest corporate tax rates in the OECD. Do you think any company would bother with tax minimisation if the company tax rate in Australia were 10% rather than 30%?

Southmouth 10:59 am 27 Nov 15

I hope we end up with a broad based tax that includes financial services for investments and that it is complimented with a flat rate of income tax made progressive by a larger tax free threshold. Unfortunately i doubt we will ever have the political climate conducive to any move toward a modern innovative system. Years of bandaids is the best we can hope for.

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