Thread: pay as you go tax

Originally Posted by p38arover

Are you still allowed to have a pee on the side of the road when in charge of a horse and cart? 'Tis illegal if you are driving a car.

Geeez I didn't know that!!!
Bit rough when your bladder is being squeezed by your prostate

Terry

Back on tax, I think it is inevitable that the GST will have to rise, as it already has in several other countries.
One reason is that multinationals have exploited differences in taxation regimes to minimise their tax paid to governments by transferring profits to low tax centres while continuing to pull in revenue in host countries. Apple is a good example, transferring most of its income to a tax haven in, I think from memory, Ireland. This has undermined the tax revenue of national governments.
Another reason is that governments have tried to buy votes by cutting taxes for short-term political gain while undermining the budget long-term. The Howard Government was a notable offender.
The result is that, even when governments curb their spending (held to about 3% p.a under the previous government), it still grows faster than revenues because many increases are built into the system. For example, health and social security can't be cut without massive public backlash against any government.
However, while government spending is outstripping the growth in tax revenue, the public continues to demand that governments do more and more, while opposing tax inceases to pay for the extra spending which people demand. That's obviously impossible.
I can't see national governments being able to bring the multinationals into line to make them pay their fair share. Even if governments had the power to make multinationals pay a fair tax return, any government which tries to collect that tax gets crucified by opportunistic local politicians currying votes. The campaigns against the mining and carbon taxes are examples, whatever their merits or not ( I don't want to be party political here, I'm talking about the tax system and the problems facing ALL governments).
We're about to see a federal budget which is predicted to include a lot of cuts and there will be big arguments about their respective merits, which I don't want to get into. There is already a push to sell off public assets such as Medibank Private, but the government promises the money raised will be recycled into new infrastructure, which means it won't reduce the budget deficit.
My point is that, as long as multintionals can go on avoiding paying a fair share by playing countries off against each other, and interest groups can mount selfish campaigns to avoid reasonable taxation on individual sectors, and politicians put vote-buying ahead of the long-term good of the nation, then I can't see these problems being fixed.
Therefore, the only realistic and fair to everyone alternative is to raise the GST. I think the UK's VAT is now about 20%, as is Japan's from memory. The GST affects everyone equally, companies can't avoid paying it, and no-one can campaign for special treatment. I would start by abolishing ALL exemptions to the GST, including food, health and education. Then I would raise it by a reasonable amount. After that I'd consider if there was a need to adjust business taxation regimes to keep the nation competitve with other countries. The aim should be for an overall result which delivers a small budget surplus, I think.
The main problem with this is that at present all the GST revenue goes back to the state governments. So, the increased revenue above the current 10% collected and given to the states should instead be kept by the national government. For example, if the GST went to 20%, then the current 10% could continue to go to the states and the national government would keep the other 10% to balance its budget. Our income tax rates are already relatively low by world standards for developed countries, so I wouldn't alter them. This is all a bit simplistic I know, but that's OK.
So, I reckon an incease in the GST is inevitable, for the reasons stated above. What do you think?




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