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The GST Debate is mostly BS - so far!

Cameron Finlay • November 12, 2015

It's easy to get fed-up with the drivel that comes from Canberra, which is readily lapped up by the media and passed on as responsible journalism.

PM Turnbull says the Government has to raise more money which means it must raise taxes.  Note, there is no mention of reviewing their spending or wasteful programs.

An "expert body" (who I've never heard of), The Centre for Social and Economic Modelling, based in Canberra (naturally) has determined a 15% GST would be hard on poorer households.  The answer to any question depends on the inputs supplied, so we don't know what kind of briefing it was given.  But the modelling resulted in a bleat by the media that any new or more tax should "be borne by the people best able to pay".

A few facts about GST and other tax issues you probably will not see in the media or even hear from politicians:

- Our personal and corporate tax rates are among the highest in the OECD

- Our GST at 10% is one of the lowest broad-based consumption taxes in the world

- Our tax mix is atypical of the type of growth-based tax system required to thrive in a modern economy

- Research by respected financial modellers shows that in just five years, bracket creep will cost taxpayers $45 billion in higher taxes

- That's three times the cost of including food, health and education in GST (to raise $13.5 billion), or just under the cost of raising GST to 15% (which would raise $53 billion)

- NZ reformed its tax system in 2010, reported its first surplus in seven years, and growth at 4% (twice Australia).  This was achieved by reducing personal taxes and increasing GST to 15%.

The conversation needs to be why tax reform is the right thing to do, for the nation as a whole.  The special interest groups and the Opposition need to understand this; it's not about scoring cheap points, which is part of the reason we have a problem.

Turnbull is not a dill and he is capable of explaining why reform is needed and what the benefits will be.  The alternative is horrible; letting the unions decide how things will be run and the Greens decide to give what's left away on their bleeding heart causes.

Turnbull is trying to talk about all issues; income tax, bracket creep, business taxes, state taxes, GST, negative gearing, CGT concessions, superannuation, and profit shifting and even tax evasion.  The debate must set Australia up for growth and prosperity while taking care of the vulnerable (not those who feel 'entitled').

It will be an interesting few months, hopefully productive, but I think I'll stay sceptical for a while yet.

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