Oct 18, 2011

Productivity needs a shot in the arm — why not a GST boost?

Iin a political climate where people are craving leadership, and Australia’s productivity needs a desperate shot in the arm, advocating a tax swap should be opportune, writes Adam Creighton, a research fellow at The Centre For Independent Studies.

No tax provokes as much irrational trepidation among our political leaders as the GST. The federal government and opposition have ruled out changes. Even the relatively academic Henry review wasn’t allowed to broach it.


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53 thoughts on “Productivity needs a shot in the arm — why not a GST boost?

  1. StrewthAlmighty

    Lady WP

    Firstly, I don’t think anyone has suggested a complete removal of income tax.

    But to consider the maths. Let’s say we increase GST to 25pc, eliminate income tax, and provide a fixed rebate of $5000 dollar per taxpayer,

    A person who earns 20,000 and spends it pays Nil tax.

    A person who earns 20,000 and saves some gets a net refund of tax.

    A person who earns 150,000 but spends 200,000 due to a penchant for fast cars and credit cards pays 50,000 tax.

    A person who earns 150,000, spends 100,000 and donates the rest to Greenpeace pays 25,000 tax.

    The way I see it we end up with a much simpler system (which benefits everyone) and everyone’s a winner except for the person with the fast car fetish.

  2. Lady White Peace

    STREWTHA yes it could work but I think we need to look at a slightly more generous amount for the lowest income person. no one can save if on $20.000pa unless they have their own (paid off) pad ,car,furniture etc. $140 pw just for food. Another $150pw ( possibly more now) for gas, elec, phone, council rates and water rates, home and car insurance plus rego. Only leaves $110 pw week for fares to and from, or petrol. Doctors/dentist/pharmacy/ dog or cat food, and the odd newspaper,magazine,book and there would be nothing left to save. Oh and I did forget shoes and clothing…even a pair of shoes pa and 3 new pieces of clothing…..oops forgot underwear and stockings….well there you go not only nothing to save, but not enough for the basis necessities.

    If I were the Treasurer AR I would not tax anything under $30000 and i would give a fixed rebate of $5000 pa to be used for educational purposes. We don’t want to end our days being dumber than is absolutely necessary.:)

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