Comments on: Ask the economists: Could a GST cut be coming? http://www.crikey.com.au/2008/11/25/ask-the-economists-could-a-gst-cut-be-coming/ now with extra source Sun, 12 Feb 2012 00:37:58 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Jason http://www.crikey.com.au/2008/11/25/ask-the-economists-could-a-gst-cut-be-coming/#comment-16861 Jason Thu, 01 Jan 1970 10:00:00 +0000 #comment-16861 Having worked for small business for most of my career I know exactly what will happen in reality. Prices will remain the same and the GST remitted to the ATO will reduce leaving the benefit within business. Small to medium business will have a difficult time reconciling why they should reduce their prices when they are already under significant pressure. Sure these funds will eventually filter their way out into the economy by freeing up cost structures within these business' and allowing them to spend, however I question how if this would be as efficient an injection of funds into the economy as the article suggests. The only solution would be to run wide scale audits that measure trends in prices and margins within business to ensure that the savings were passed onto consumers! Would be interesting to see how the UK plan to administrate and police their VAT reduction. Having worked for small business for most of my career I know exactly what will happen in reality. Prices will remain the same and the GST remitted to the ATO will reduce leaving the benefit within business. Small to medium business will have a difficult time reconciling why they should reduce their prices when they are already under significant pressure. Sure these funds will eventually filter their way out into the economy by freeing up cost structures within these business’ and allowing them to spend, however I question how if this would be as efficient an injection of funds into the economy as the article suggests. The only solution would be to run wide scale audits that measure trends in prices and margins within business to ensure that the savings were passed onto consumers! Would be interesting to see how the UK plan to administrate and police their VAT reduction.

]]> By: Perry Gretton http://www.crikey.com.au/2008/11/25/ask-the-economists-could-a-gst-cut-be-coming/#comment-16862 Perry Gretton Thu, 01 Jan 1970 10:00:00 +0000 #comment-16862 Once you accept the notion that the GST rate can be varied downwards, you've opened the door to the rate being varied both up and down at the whim of the government. GST was made acceptable because the rate was preserved at 10% and successive governments have ruled out any thought of increasing it. I'd prefer it to stay that way.<br /><br />On the other hand, suspending or removing GST from groups such as public utilities would not only have the same intended effect as a general reduction but also help those who are most in need, namely those on low or fixed incomes. Once you accept the notion that the GST rate can be varied downwards, you’ve opened the door to the rate being varied both up and down at the whim of the government. GST was made acceptable because the rate was preserved at 10% and successive governments have ruled out any thought of increasing it. I’d prefer it to stay that way.

On the other hand, suspending or removing GST from groups such as public utilities would not only have the same intended effect as a general reduction but also help those who are most in need, namely those on low or fixed incomes.

]]> By: Mal http://www.crikey.com.au/2008/11/25/ask-the-economists-could-a-gst-cut-be-coming/#comment-16863 Mal Thu, 01 Jan 1970 10:00:00 +0000 #comment-16863 Cutting GST would help consumers - but only a little bit and there is no guarantee it would be spent. I think governments should also look at removing the incredibly regressive payroll tax that will be an impediment to employment especially in a period of growing unemployment. Employers, because they have grown enough to have around 20 staff or so have to pay 4.75% (Qld) of their payroll as a tax to the state govt. What a great reward for employing too many people! Is the incentive to employ less??? Cutting GST would help consumers - but only a little bit and there is no guarantee it would be spent. I think governments should also look at removing the incredibly regressive payroll tax that will be an impediment to employment especially in a period of growing unemployment. Employers, because they have grown enough to have around 20 staff or so have to pay 4.75% (Qld) of their payroll as a tax to the state govt. What a great reward for employing too many people! Is the incentive to employ less???

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