Thread: Expenditure Tax.... the Gamechanger?

Originally Posted by trout1105

Wouldn't it be a Far better idea for the government to stop wasting our tax dollars on bad management, bad ideas and rorts.
This way we wouldn't need a new tax and maybe even pay less tax

That will never happen,its just a part of life.The only difference is some waste a lot more than others


Inflation is climbing, Wages are stagnant and all of a sudden a extra tax cost is a good idea
You can only get so much blood out of a stone.

It isnt an extra tax,it replaces all taxes.I wonder how they will work out LCT,and Land Tax....

Originally Posted by Arapiles

The only reason people thought that it was a good idea was that they hadn't worked out how much tax they were actually paying: people tended to focus on the highest marginal tax rate they paid and invariably assumed that was the rate of tax they paid on everything. In point of fact the overall tax rate was the blend of rates that they paid. The Bjelke-Petersen flat tax was 25% on everything, no exceptions. That's actually more tax than most people were paying back them, or now.

Except now you pay GST, Stamp duty and all the rest of what's left over of your post tax dollars.

25% is too high. 10% flat is the sweet spot imo.

Originally Posted by Discosux

Except now you pay GST, Stamp duty and all the rest of what's left over of your post tax dollars.

25% is too high. 10% flat is the sweet spot imo.

With total government expenditure in Australia equal to around 39% of GDP (Federal government is about 24%), it is a bit hard to see how 10% or even 25% as a flat and only tax is going to cut it!

Originally Posted by ramblingboy42

I have had an expenditure tax explained to me , it seems to make sense and adds up. This would eliminate every other form of taxation , after all, taxes are only charged to raise revenue.

Please do not challenge my exact figures here , they are close enough to get the point across.

2018 RBA figures used for illustration.

Australia's Federal and State Government revenue combined was $511 billion.

Australia's Federal and State Government expenditure combined was $735 billion.

So we had/have a combined government defecit of approx $220 billion.

Total Australian expenditure in 2018 was according to the RBA $255 billion per working day.

There were 251 working days in 2018

If this total national expenditure for 2018 was taxed at a 2% expenditure tax rate (discounting all other taxes) $1.3 trillion would be raised as revenue giving a surplus of approx $500 billion .....this could continue into perpetuity.

I can't really see a problem with this.

Why hasn't it seen the light before? Maybe it has. It was passed on to me.

For the life of me I can't find this info anywhere - can you please post a link to this? Thanks.

I suspect there is an error in a key assumption. The ABS has retail turnover at around 27-30 billion a month. (Retail Trade, Australia, March 2022 | Australian Bureau of Statistics). I think this tax would have to only apply to retail prices or the 2% would compound (and the GST is designed to avoid that).

The 255 billion per day figure in the original post looks close to the turnover of AUD on the Foreign exchange markets.

If I'm correct the 2% figure is no-where near enough to generate the income needed.



Cheers

Michael

Remember the "Henry Review" ... here is the first recommendation.

1. Concentrating revenue raising on four efficient tax bases

Australia has too many taxes and too many complicated ways of delivering multiple
policy objectives through the tax and transfer systems. The capacity of the legislative and
operating platforms of these systems, and their human users, to deal with the resulting
complexity has been overreached. The tax and transfer architecture is overburdened and
beginning to fail in dealing efficiently and effectively with multiplying policy goals and
demands. Rationalisation of the tax and transfer architecture should now be a strategic
priority.

Key directions

• Revenue raising should be concentrated on four robust and efficient tax bases:
– personal income, assessed on a more comprehensive base;
– business income, with more growth-oriented rates and base;
– private consumption, through broad, simple taxes; and
– economic rents from natural resources and land, on comprehensive bases, noting
that revenue from rent taxes will likely be more volatile than from the existing
resource royalties it will replace.

• Other taxes should be maintained only if they efficiently address social or economic
costs — such as taxes on tobacco, alcohol, gambling and environmental costs, and
efficient road user taxes or charges.

• In time the following taxes should be abolished and their revenues replaced by taxes
applying to the four robust and efficient tax bases:
– insurance taxes;
– payroll tax;
– property transfer taxes;
– stamp duties on the purchase of motor vehicles;
– resource royalties, replaced by the rent tax;
– luxury car tax;
– the tax on superannuation contributions in the fund;
– income taxes on all government pensions, allowances and benefits; and
– fuel and vehicle registration taxes, if replaced by more efficient road user charges.

I'm haven't followed the public policy to know what, if anything, has been implemented from this list. I thought there were some changes to economic rents from natural resources - but cannot recall the details.

Originally Posted by scarry

It isnt an extra tax,it replaces all taxes.I wonder how they will work out LCT,and Land Tax....

The government never abandons a tax, I just invents new ones to add to all the others.

Originally Posted by Homestar

For the life of me I can't find this info anywhere - can you please post a link to this? Thanks.

can't produce a link , but you may find it by looking for australia one websites q+a