Tax System

[Admin]

A joke about the tax system in the Aviation Laughter forum here started me thinking so I thought I would put an idea up and wonder why this can't be done.

 

Why can't we abolish income tax (leave company tax though) and raise the GST amount to a percentage that will compensate the loss of income tax?

 

• The Tax Dept would be better off with work loads
   
  
• The private individual wouldn't have to do a tax return
   
  
• The poor man would have more cash in his pocket to decide what to spend it on
   
  
• The items that a poor person would by i.e. No Brand Baked Beans wouldn't increase in price as much as Heinz Baked Beans would
   
  
• The rich person would pay more for the higher priced items that they normally would buy i.e. Heinze Baked Beans
   
  
• The worker would be stimulated more to work more instead of knowing that if they work more they just lose it in extra tax so greater enthusiasm to improve ones self
   
  
• The rich can't escape tax as they pay as they purchase i.e. they pay more tax on a BMW then they would on a Holden
   
  

 

Overall the Australian individual would be choosing how much tax they pay by their spending habits and whether they want No Brand Baked Beans or high priced with more GST imported baked beans

 

Wouldn't we be better off?

 

 

[Zibi]

• The Tax Dept would be better off with work loads
  

 

I think you have answered yourself there...

 

But to be serious - if you wanted to do that, you'd have to rack up the GST to something like 50-60%

 

You'd also have to put customs on everything you bring into the country, and I mean everything.

 

 

[youngster]

In 2010-11, the Commonwealth collected about $205 billion in income tax. Annual GST revenue is worth about $50 billion. So the GST would need to be 50% to compensate for the loss of income tax revenue. This would massively disadvantage people in the lower income brackets, who currently pay little or no tax. High income earners would actually pay less tax, because they currently pay 40+ per cent income tax, and 10% GST on purchases, luxury car tax on vehicles, etc. Then, there is the question of what to do with capital gains. You also have to consider people who would earn money in Australia income tax free, then go overseas to spend most of their savings. The other issue to consider is that the GST, although collected by the Commonwealth, is actually a tax designed to fund the States. Inflation would instantly soar, requiring massive extra funding for the welfare system. State Governments buy goods and services, so their costs would massively increase (eg, hospitals, etc). Then there is the political angle to consider - which politician is prepared to be responsible for increasing the price of everything by 40%, overnight?

 

 

[Admin]

That explains it...it was just a thought since I had to visit the accountant yesterday for tax time

 

 

[eightyknots]

Do you remember Pauline Hansen? One of her advisers did some calculations on a "transaction tax" which meant that every MOVEMENT of money would be taxed, whether it was your income received, bills paid, etc. His calculations worked out that, if this was set at a pretty low rate, income tax could be abolished. This idea also had the advantage of not stinging the poorer people: because they have less money to spend and they earn less, they are slugged with less tax. On the other hand, higher income people would pay a larger transaction tax when earning their income and also when paying for their Moets and Boats, etc. It seemed a pretty reasonable idea at the time and a university economist did some checking on this and found it workable (if there was a staged introduction over several years). But, because the idea became attached to the One Nation brand, once that party "sunk", so did the idea of a revamped, workable, fairer taxation system for our country.

 

Perhaps it's worth dusting off and looking at it again??

 

 

[Kyle Communications]

The actual rate was .33% on every money transaction it would collect about 3 times the amount that income tax and GST collect...the reason wasn't One Nation it would make the tax dept and the many tens of thousands of bl****rs....sorry... workers there redundant with no job as 90% of all transactions would be collected by the money institutions. Basically its like a get but only when you transfer money from one place or business to another

 

 

[Gnarly Gnu]

You paying income tax Ian? If you have a family you'll get it back via family welfare payments or whatever they call the circular cash scheme (unless you are earning big dosh).

 

This guy has some ideas for serious tax reform in Australia. Personally I think a simple flat tax with a standard single page tax return form would be the go, put some incentive back into the system.

 

 

[johnm]

No accountant will be happy with this thread ! - they too will twiddle their thumbs with any simplification of tax law

 

Also income producing property ....... rental houses etc ............. and negative gearing / depreciation of those assets ................................ a major portion of the realestate market balances on this concept

 

By balancing I mean if depreciation was taken away .............. I'd guess property values would plummet .............. the investor could not afford to keep the house ................. there'd be a glut on the market and houses would then be more affordable to buy:

 

1 . and we can't have that (if you own property)

 

2 . great idea (if you want to buy a house)

 

 

[Jarries]

Like the topic, but the answer always seems to be the same, government working for themself rather than the voters.., My next venture is to convince the Tax man to pay for part of my flying lessons.., lucky in my business it may be possible?

 

 

[Admin]

You paying income tax Ian? If you have a family you'll get it back via family welfare payments or whatever they call the circular cash scheme (unless you are earning big dosh).

No, got to be earning money first to pay tax but the wife gets her entire tax back...will pay our food bill for a week...she is on a massive $18 per hour for a couple of days a week. Every night on the news here in Melb there is some company or another going broke and shutting their doors

 

 

[fly_tornado]

One problem with consumption taxes is that the very rich only spend a small fraction of their income compared to the peasants. Another problem is that the tax revenue from the GST is effectively capped @ the value of the lower income earners spending which is what is happening with the GST now. Another problem is that when people that are in the cycle of paying down debt, they aren't contributing to the GST.

 

 

[cscotthendry]

Any system that is aimed at making rich people pay more is doomed to fail.

 

It's easy to get the middle and lower classes to pay more because they don't have the funds to fight off the legislation, and they never act in concert anyway. The rich on the other hand see the expenditure required as an investment. This is particularly true with large corporations. They are willing to spend millions on court cases and/or propaganda advertising as fending off these types of laws save them tens of millions. Also, the corporations and wealthy individuals will almost always unite against any attempts to get them to pay more. A case in point in the 20 million dollars the mining industry spent to fight off the original mining tax.

 

 

[youngster]

There are very few tax dodges left in Australia, even for the very rich. If you earn money here, as an individual or a company, you can't really avoid tax. Even with complicated trusts and other structures, there's not much that can be done to avoid paying tax.

 

I've had long chats with a colleague who is a Chartered Accountant about this issue. He worked with big companies and high net worth clients, and even they couldn't excape the clutches of the Tax Man. The only way to avoid paying tax is to make big losses (eg, negative gearing), but in that case, you still lose money, but to the bank, not the ATO.

 

 

[Gnarly Gnu]

There are very few tax dodges left in Australia

Union official.

 

Even better you don't actually have to earn the money to avoid the tax - the tax free money just... comes to you.

 

 

[facthunter]

GG. money in paper bags was a Bjelke Petersen thing. HSU east is not your normal union and I know of some companies who had "tame" bribed union mates. Some union officials have had their kids welfare threatened. It's a rough world out there. In many countries NOTHING happens without a bribe. It's a constant fight to stop it. Plenty of well off people regard paying tax as VOLUNTARY. Tax havens and swiss banks still exist. Casino's and such make money laundering possible. Big insurance companies speculate on currency movement. really wealthy individuals can speculate on a small countries currency and manipulate it , and send it broke..Nev

 

 

[eightyknots]

Big insurance companies speculate on currency movement. really wealthy individuals can speculate on a small countries currency and manipulate it , and send it broke..Nev

Which country has ever gone broke due to currency speculators, Nev?