Is a GST increase on the cards? Victoria points finger at Canberra

A question at Daniel Andrews’ press conference points to a possible GST increase.

Victorian Premier Dan Andrews

The possibility of lifting the GST rate was raised in the most unlikely of places on Monday – the Victorian premier’s press conference to provide the latest COVID-19 update.

It has become somewhat of a joke among those who regularly watch the premier’s press conferences that some of the questions journalists ask are being directly provided from federal politicians in Canberra, but Premier Daniel Andrews made it official when he was asked about the possibility of a GST increase.

Channel Seven journalist Laurel Irving asked whether Premier Andrews would consider giving up payroll tax in return for an increase in the GST.

He responded: “I wonder who in Canberra asked you to ask this question, Laurel! Interesting.”

Talk about the possibility of raising the GST, or reforming the GST system to get the economy growing again in the wake of the damage caused by the pandemic, raised its head in July, when independent firm PriceWaterhouseCoopers (PwC) released a discussion paper on the topic.

Australia’s current rate of GST is 10 per cent, which is well below the OECD average of 19 per cent.

The PwC analysis showed that lifting GST to 12.5 per cent and extending it to include fresh food, education and health would generate $40 billion a year.

When asked about the possibility of increasing the rate back in July, Prime Minister Scott Morrison avoided giving a definitive response, while treasurer Josh Frydenberg said the government’s “focus had been on cutting taxes, recognising that tax reform was one of the key areas that we need to drive forward on”.

Premier Andrews said there might be an opportunity for tax reform but said that the conversation needed to go deeper than “just jacking up taxes”.

“I’m not aware of a proposal,” Mr Andrews said. “If one came forward, we would look at it.

“Tax reform and just jacking up taxes are two very different things.

“It is easy for people in Canberra just to sort of point a finger at the states and say why don’t you abolish a whole lot of these things,” he said.

“Payroll tax supports the provision of police, nurses, teachers and all sorts of different things. It is a significant percentage of our revenue base.”

Mr Andrews also attacked the way that the GST was currently distributed among the states, suggesting it was unfair.

“We don’t get 100 cents in the dollar that Victorians pay in the goods and services tax, we get, through a convoluted and, we think, unfair formula, we get a percentage of that,” he said.

Any time GST increases are discussed, there is also the issue that it hurts those on fixed incomes, including retirees, hardest.

While some models for GST increases look at increasing welfare payments to adjust for these changing circumstances, this also creates further problems.

“I gave a speech, I think at CEDA some time ago, where I talked about the notion that increases in the GST can be very problematic in that by the time you compensate everybody for the fact they’re worse off, there isn’t much left,” Mr Andrews said.

Do you think the federal government will use the COVID crisis to try and push through a GST increase? Would you support a GST increase? Would you support a GST increase if it were accompanied by an increase to the Age Pension?

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    COMMENTS

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    Garyand
    29th Sep 2020
    10:44am
    Australia has one of the lowest GST rates in the OECD, so it makes sense as the GST % funds are at much lower levels than when GST was first introduced in Australia. IF such an increase to say, 15% (as per NZ), adjustments to income tax rates and welfare would have to occur. Mind you, all states and territories have to agree, which would be interesting to see!
    The Thinker
    29th Sep 2020
    11:08am
    Australians pay so many different taxes at the expense of tax cuts for the rich and corporate tax evasion loopholes. The cost of living keeps on increasing and wages aren't. Ordinary Australians that keep this country going should not be burdened anymore.
    Pass the Ductape
    29th Sep 2020
    12:52pm
    Doesn't matter what people think, if the Government needs money they'll get it and levying taxes in one form or another is the only way. The art for government is to work out when and where to apply them - then convince everyone they can afford to pay them (the taxes).
    Lookfar
    30th Sep 2020
    9:32am
    Garyand, there is no law that says all governments have to be equally bad.
    Youngagain
    2nd Oct 2020
    8:09am
    No such law, Lookfar, but it seems the people who are attracted to politics are all equally stupid and corrupt, and therefore pursue the same policies and objectives.
    Tanker
    29th Sep 2020
    11:15am
    This suggests that the the upcoming tax cuts for the wealthy will be funded by an increase in GST which is payable by everyone including pensioners. The conclusion from that is surely that pensioners will be funding the tax cuts for the wealthy.
    Youngagain
    29th Sep 2020
    11:45am
    I doubt it, Tanker. Pensioners will most likely be compensated. It's the self-funded retirees who will pay for the tax cuts for the wealthy, and folk like you will claim that's fair, because you wrongly assume the self-funded are the wealthy. Most are certainly not. Many are really struggling and a GST increase will be the last straw after losing up to 1/3rd of their income in the assets test change and then seeing share prices and dividends fall.
    Dotty
    29th Sep 2020
    1:14pm
    I think you are on the right road thinking Tanker !
    I agree that if they increase the Gst then everyone pays but what the pensioner get in an increase will not compensate for this increase in GST as we will be worse off, as we get an increase and they increase price of all food items then there goes the increase plus more from the pension and most of us are just holding our heads above water now on the Pension!
    Dotty
    Triss
    29th Sep 2020
    3:24pm
    Yes, Tanker, the powers that be think everyone’s too thick to realise that.
    Farside
    29th Sep 2020
    7:05pm
    it matters little how the tax cuts for the wealthy are funded so long as the rich get richer and own a greater proportion of all riches. It's the natural way.
    inextratime
    29th Sep 2020
    9:56pm
    Ho ho ho Tanker. Believe it or not pensioners are a formidable voting block. Your left wing projection is the worst kind of fearmongering.
    Farside
    29th Sep 2020
    10:36pm
    pensioners could be a formidable voting block, but history tells us they are also a predictable and disorganised voting block which sort of reduces their potential influence overall.
    jaycee1
    29th Sep 2020
    11:16am
    The government will jump on using Covid as an excuse to increase the GST while at the same time giving the rich tax breaks.
    A really good idea would be to make the rich /companies pay their fair share of taxes, keep the GST as it is, give pensioners/unemployed a reasonable rise which would then have more money going into the economy thus helping create jobs.
    Jaymee
    29th Sep 2020
    11:20am
    Put GST up to 15% and apply it across the board as they do in NZ. Ultimately it will have minimal impact on the consumer as has been the case elsewhere.
    Youngagain
    29th Sep 2020
    11:48am
    What rubbish! How on earth can you think that increasing the GST and applying it to food etc. would not have an impact? For a start, a $100 week food bill (which is not high for a couple) would immediately jump to $115. That's an extra $30 per fortnight low income-earners have to find. Then extend the increase to electricity, gas, petrol, rent... OMG! It would be a disaster for struggling retirees and low income families.
    Jaymee
    29th Sep 2020
    11:54am
    How about $105 as it's already 10%.
    KSS
    29th Sep 2020
    11:59am
    Young again your sums are not quite right. There is already GST on electricity, gas, petrol, and indeed most food. Your grocery bill is highly unlikely to increase by 15% assuming a 15% GST, and other bills would increase only by 5% NOT 15%. And do not forget that when the GST was introduced, pensioners and other on welfare payments were given increases to offset its introduction. No doubt the same or similar would happen again.

    The fact is states like NSW and VIC subsidise the other states through GST (so much for QLD hospitals for Queenslanders). Perhaps we should demand the GST raised in a State/Territory stays in that state & territory!
    MjP
    29th Sep 2020
    12:28pm
    KSS it is your sums that aren’t quite right because most food items don’t have GST applied so a 15% increase across the board would increase grocery bills by close to 15%
    Mariner
    29th Sep 2020
    2:50pm
    MjP - you have got that right. Most foods we buy are exempt from GST i.e. fresh meats, vegetables, breads etc. Where we pay it fully is in alcoholic beverages and packaged foods.
    Having been in NZ there is a bit cost increase in 15%, however, as they have always been slugged the full monty on everything in the trolley.
    I see the problem arising when the sales and excise duties stay put and the 15% slug comes on top is brought in. Now that is grossly unfair. In Switzerland the VAT is 8.6% for most things but for essential items is only 2.5% and that includes little take away shops. Across the border in Germany the VAT is 19% and a lot of people cross the border to shop in Germany, have the bill stamped and next time getting all their tax back because they took the shopping home. Lots of shops closed along the border because of that.
    Just as well our states do not have different rates otherwise we could be in the same boat.
    arbee
    29th Sep 2020
    3:33pm
    MJP and Mariner, I suggest you have a look at your weekly shopping bill and see just how much GST you actually are already paying at 10% now. This would amount to 75% to 80% of most peoples grocery bills, especially those that are working and don't have as much time to prepare meals with fresh produce.
    Diamond Jim
    29th Sep 2020
    4:43pm
    What rubbish!
    Farside
    29th Sep 2020
    7:59pm
    maths can be confusing when it doesn't fit the narrative, let alone the compensation to offset increases for welfare recipients and low income earners
    inextratime
    29th Sep 2020
    9:58pm
    There is no way the gst will increase. The government want people to SPEND, not cut back !
    Rae
    30th Sep 2020
    12:59pm
    Bit of a shame arne.

    People might not be so poor if they just got on with cooking for themselves and taking packed lunches and not wasting on coffees.

    Then again they'd miss out on the free pension if they saved wouldn't they?
    Youngagain
    1st Oct 2020
    3:58pm
    Spot on, Rae.
    Farside
    1st Oct 2020
    4:48pm
    a pov would need to consume a lot of packed lunches and home made coffee (or is it powdered chicory for the poor) to take her (or him) to the pension threshold .... meanwhile the local café responds to downturn in revenue
    Eddy
    29th Sep 2020
    11:25am
    I like to think I have an open mind on subjects such as GST so I would rather wait until I hear a firm proposal before I start ranting. However I am inclined to oppose the GST in principle as it is a non-progressive tax, I have never thought GST was an appropriate tax regime for a large (in area) and sparsely populated country like Australia. However can we afford to change tax regimes again?
    First everyone, regardless of means, pays the same tax. A pensioner who treats themself to a packet of biscuits pays the same tax on the biscuits as a billionaire. Secondly, the GST discriminates against those not living in metropolitan areas, things tend to cost more in non-metropolitan areas due to freight costs, less competition and lower sales volumes. That same packet of biscuits may cost an extra 10c in a rural shop therefore country people pay more GST for the same item as their city cousins (unless they travel to the city to shop in which case their local stores are deprived of revenue and locals are deprived of employment opportunities).
    Youngagain
    29th Sep 2020
    11:49am
    I agree Eddy. It's a very unfair tax and it defies the principle that people should be taxed according to their capacity to pay.
    KSS
    29th Sep 2020
    12:05pm
    Eddy a far worse 'non-progressive' tax is payroll tax. Why tax a business for providing employment? It makes no sense at all. The more employees, the more income tax is generated. But of course the payroll tax is a state tax and the states won't give up that revenue stream in favour of a higher GST.

    And one more thing, if you buy the ingredients to make that packet of biscuits (flour, sugar, butter) you won't pay GST at all at the moment! But of course you won't get the 'extras' like preservatives and colourings :-)
    Tom
    29th Sep 2020
    12:31pm
    Wealthier people don't buy the same packet of biscuits. Wealthier people consume more expensive products and therefore pay more GST.
    The politics of envy is killing this country, Eddy.
    Eddy
    29th Sep 2020
    12:49pm
    Sorry Tom, I was using biscuits as an illustration, you could substitute DVDs or house paint or Rolls Royce's if it would make you more comfortable.
    The 'politics of envy' is a device used by those that have, to denigrate those that don't have. Even Mr Turnbull, who I suspect is a basically a good person, used 'politics of envy' to deflect criticism of his alleged use of overseas tax shelters to minimise his Australian tax liability. The 'politics of greed' is a more fatal condition than envy.
    arbee
    29th Sep 2020
    3:43pm
    For a change I agree in principle with most of what you say, but in your comparison with the pensioner and a billionaire, or even a millionaire in this case, you also have to allow that they will spend so much more in a year and therefore pay much more GST tax, whereas now they have smart accountants who help them to reduce their taxes. Pensions and regulations for self funded retirees would of course have to be adjusted up. The other area that will bring in massive amounts of revenue that now doesn't get any income tax revenue from is the black economy, which is in the scope of billions of undeclared income in Australia. These people spend most of the black money they earn, because they cant bank it without the risk of the ATO catching them, so the extra GST from them would be quite a lot as well.
    Youngagain
    1st Oct 2020
    9:21pm
    arbee, do you really think people don't manipulate to avoid GST? Business owners buy goods for private use all the time and claim back the GST. The black economy works with cash payments, and if cash is abolished it will become a trading economy. My hairdresser already accepts tomatoes or avos as payment for a haircut. I know a pensioner who pays for everything with home-made liquor (brewed illegally!). No GST paid by any party in those transactions.
    Sooty from Marketing
    29th Sep 2020
    11:35am
    The 2017 changes to the Pensioner Assets Test has cost me over 10% of my income, so in effect I’ve been paying 20% GST since 2017. Will gladly pay 15% GST if the LNP and Greens reverse the changes to the 2017 Pensioner Assets Test.
    Youngagain
    29th Sep 2020
    11:50am
    Good luck with that, Sinic. They will increase the GST, but no way will they give back that pension loss. Nor will you get any compensation for the extra tax you will pay. But you are lucky to have only lost 10% of your income. Many lost up to 30%.
    KSS
    29th Sep 2020
    12:06pm
    Whether you 'lost' 10% or 30% it means you have assets that could/should be used to support your retirement. In that respect you lost nothing!
    Sooty from Marketing
    29th Sep 2020
    1:22pm
    KSS I didn’t loose 10% it was stolen then promptly spent on stogies by fat Joe and his Belgian mate.
    Mariner
    29th Sep 2020
    2:58pm
    Sinic, you should have spent the money that showed in your accounts when the writing was on the wall. Some friends upgraded their living arrangements and did not lose a cent. So if you live in a $500'000 house get one for 50% more and then you would be OK. Visible investments are low hanging fruit these days. When the piper changes the tune if you have to change the dance. Not liking Lebanese Joe and Belgian Matthias (Hockey and Cormann). Do love a cigar now and then but!
    Farside
    29th Sep 2020
    8:05pm
    Sinic, you should be grateful Joe's Belgian mate did not introduce Belgium's GST rates. Personally I think 10% and no exemptions would be a good start before increasing the rate.
    Rae
    30th Sep 2020
    1:09pm
    KSS you keep saying these sorts of things. Why should a saver could/should use their assets when the free aged pension goes to those who often chose to spend instead.

    Not only did the saver lose the pension but they lost the nights at the club, holidays, private schools and all the other unnecessary squandering people choose to do. Yet only savers get diddled.

    Perhaps lifetime income needs to be considered and how much tax paid. Cat among the pigeons.

    I lost income with no assets as my 43% non concessional was deemed 10%. I'm filthy about it. Not only forced to save while other's spent like there was no tomorrow but then punished for it at the end. It was sheer bastardly.
    Farside
    30th Sep 2020
    2:18pm
    'diddled' is a state of mind. Savers were always aware that choices have consequences.

    "Perhaps lifetime income needs to be considered and how much tax paid." - big fan. Life would be much easier if I could draw down against past taxes.
    Youngagain
    1st Oct 2020
    3:55pm
    I agree, Rae. The system is wrong and anyone who claims savers should just spend their savings is supporting theft. Those savings were not put aside to benefit others. Sacrifices were made to benefit the person making the sacrifice, but greedy people now insist they should forego the benefit they earned and give it all to folk who didn't bother. It's not just unfair to the saver. It's harmful to the nation, as it discourages planning for self-sufficiency in old age.
    Youngagain
    2nd Oct 2020
    8:08am
    Farside, choices have consequences, but savers were told they were doing what was best for them and best for the country. To now punish them and reward those who chose to be spendthrifts is criminal. You can't excuse it by saying 'choices have consequences'. The consequences, when determined by people - not nature - must be consistent with the appropriate objectives and the messages on which the choices were based.

    Spendthrifts, gamblers and drinkers should NOT be rewarded. And savers should not be punished. It's not about consequences of choices. It's about bad policies that destroy our economy and our society. Please stop condoning them.
    Farside
    2nd Oct 2020
    2:22pm
    Youngagain, savers should have been aware that not everyone was living life as frugally as them when they made their choices. Savers are not being punished for their choices or those of the gambling, drunken spendthrift deplorables you so despise, nor are the deplorables being rewarded for their indulgences. Indeed in retirement the financially independent savers are in a better position with more control over their circumstances. Take a breath and wind back your hyperbole, there is no crime here and indulgences are not criminal acts, irresponsible yes, but criminal no.

    You may prefer a society without a safety net for those that did not adequately provide for their future, however I suspect we would be in a much worse place if poverty stricken deplorables were left to fend for themselves. It does not mean I condone frittering away savings on gambling, consumption and booze.

    FYI, not everybody receiving age pension is a pov deplorable but includes many who planned their retirements.
    Youngagain
    3rd Oct 2020
    10:14am
    I didn't say indulgence was criminal, Farside. And I don't want a society with no safety nets. But neither do I accept it as reasonable that those who choose to save for greater comfort in old age or to leave something to offspring should be deprived while those who indulge receive handouts. The age pension should be paid to all equally. You don't achieve a healthy society by depriving responsible people and handing out to irresponsible. As can be evidenced by proper research, you merely encourage a lot of manipulation and cheating and more irresponsible lifestyles. We need to reward savers if we want to boost the economy. It's that simple.
    Youngagain
    3rd Oct 2020
    10:18am
    Oh and yes, many receive the age pension who planned their retirements - because the system punishes them for planning to be self-sufficient and either incentivizes manipulation to avoid deprivation or forces them to spend their savings until they qualify for a pension. Neither is good policy. I fall into the latter category. When I really need my savings, I won't have them anymore. I'll be reliant on a pension and unable to afford the benefits I saved for. It defies logic how anyone can think that is acceptable.
    Youngagain
    29th Sep 2020
    11:43am
    GST is an inequitable tax that hurts the poorest and benefits the wealthy. It should be abolished rather than increased, and it certainly should not apply to food. No compensation plan can ever adequately compensate all who would suffer if the rate were increased, and it would patently unfair to increase pensions but not compensate people on fixed incomes or living off savings.
    Tom
    29th Sep 2020
    12:38pm
    Your ignorance of the mechanism behind a consumption tax is breathtaking.
    The wealthy consume more and therefore pay more GST. Nothing unfair about that.
    Eddy
    29th Sep 2020
    1:21pm
    No Tom, I suspect your ignorance of the mechanism of the GST is appalling, it is far more complex that just paying an extra 10% for almost everything.
    My daughter-in-law makes lovely 'pin' money by completing BAS for a few small traders, such as carpenters, plumbers and electricians, as the accounting is too complex for them (or their wives). The old wholesale sales tax system was easier (and cheaper) for business. Begs the question how much do we, as consumers, pay to support the GST system when every business, no matter whether a single trader or a large conglomerate, has to employ people to complete their BAS?
    Even when I was in public service we had to had a 'GST Section' where they collected all operating expenses of the department so the department could recoup the GST paid on good and services supplied. Every time I travelled on departmental business I had to compile a statement, with attached receipts, of all expenses I incurred (and because I used a departmental credit card I could not 'fudge' the figures). This could take me up to 2 hours (at an engineers salary).
    KSS
    29th Sep 2020
    1:56pm
    Eddy if your DiL is making 'pin money' then I suspect she would be well under the GST threshold and therefore the same rules don't apply! Of course is all depends on how big a 'pin' she has!!!
    Youngagain
    1st Oct 2020
    3:51pm
    KSS, he didn't say his DiL was paying GST on HER business income. He said she is completing BAS for other traders. And he's right. It's shockingly complex and burdensome, and Tom's claim that it impacts the wealthy because they consume more is just nonsense. The wealthy have the luxury of only buying what they need, so only the percentage of income they spend is taxed via GST, and at a flat rate. The poorer folk have to spend all their income and therefore pay GST on 100% of their income at the same flat rate as the wealthy pay. It's a regressive and unfair tax that hurts those who can least afford to pay.

    Sorry, Tom, it's you showing 'breathtaking ignorance'.
    Winston Smith
    29th Sep 2020
    11:47am
    Just another move by the Libs to take from the poor and give to the rich. I cannot comprehend why anyone with an income less than $200,000 pa ever votes Liberal.
    Youngagain
    29th Sep 2020
    11:52am
    Because Labor is worse, Winston. They have the same goals. They just sing to a different tune, and, sadly, lie more believably. Intelligent folk see through their lies, which is why they weren't elected last time around. I don't think most of us really wanted the LNP and its policies. We just knew the damage Labor's policies would do.
    Tom
    29th Sep 2020
    12:41pm
    Keating supported a GST. Google "Option C, Keating".
    The reason they support Liberals is because their job prospects will always be better under the Libs.
    KSS
    29th Sep 2020
    2:04pm
    $200,000 a year???????? Please define 'rich'and 'poor'.
    Winston Smith
    29th Sep 2020
    2:04pm
    Youngagain and Tom - You are spouting discredited, Liberal party dogma. Not convincing.
    Farside
    29th Sep 2020
    8:16pm
    defining "rich" is not straightforward however it's worth noting the childcare subsidy does not cut out until family income $353,680 and of course the poor know who they are.

    Top 20% of households averaged $280,956 in 2018, bottom 20% $24,336.

    https://mccrindle.com.au/insights/blog/australias-income-and-wealth-distribution/
    Youngagain
    1st Oct 2020
    3:47pm
    Winston Smith, I am most certainly NOT spouting LNP dogma. I am making a statement of fact based on research and common sense. If you can't see that Labor would be a disaster, you are not looking closely enough.

    Here's just one issue. Labor is screaming that the superannuation guarantee levy must be increased because that will improve retirement outcomes. Really? Money doesn't come out of fresh air. If employers have to pay more into super, they will pay less in wages. No employer is going to just suck up a required increase and keep increasing wages as well. So workers lose income during working life. Then they retire and find that yes, they have a slightly larger nest egg in super, and guess what? it costs them age pension income. Now, the wealthy don't need an age pension anyway and the a small wages loss doesn't hurt them. They enjoy a much higher tax break. (Remember, they get a 30% tax concession for super contributions and income, while the struggling get little or no tax benefit!) Battlers lose needed income while working and pension income when retired, so with little or no tax benefit, they lose out every which way. Only the wealthy win. And that's how Labor wants it to be. If Labor was genuine about it's claimed goals, it would demand the superannuation tax concession system be reformed rather than insisting on an increase that will hurt battlers.

    Franking credits are another issue Labor got wrong. They ignored the fact that all super funds invest in companies that pay franked dividends, so ordinary workers lose. Vast numbers of self-funded retirees need their franking credits to survive and would have to claim a pension without them. Once they go on the pension, instead of saving the government $20,000++ per SFR per annum, they cost the government pension income plus the cost of concessions plus the cost of the franking credits they would then be entitled to as pensioners. Labor's stupid policy would merely encourage more people to plan to be aged pensioners, which would hurt the nation.

    Do some proper research, Winston. I detest the LNP and their policies, but it is a fact that Labor is worse - a fact that is undeniable by anyone who examines their policies objectively instead of just swallowing their propaganda.
    Karl Marx
    29th Sep 2020
    11:49am
    Raise the GST by 50% to 15%. Increase welfare & the OAP by 50% to compensate. All goods & services pay GST with no exemptions.
    States to abolish ALL stamp duties.
    Forthcoming tax cuts abolished.
    The current tax system to be revised to stop loopholes & off shore cuts etc. Abolish ALL trust funds.
    Introduce a universal pension with no income or asset testing.
    Australia will be a fairer & better place to live.
    Youngagain
    29th Sep 2020
    11:54am
    Well, with a universal pension and no income or asset testing, retirees might accept a GST rise, Karl Marx. But low income families would be hit very hard. No compensation program will ever compensate for the massive increase in the cost of living that would result from raising the GST. It's an inequitable tax that favours the rich and really hurts the poorest badly.

    Some of your ideas are great, but not the GST increase.
    Horace Cope
    29th Sep 2020
    12:09pm
    "Do you think the federal government will use the COVID crisis to try and push through a GST increase? Would you support a GST increase? Would you support a GST increase if it were accompanied by an increase to the Age Pension?"

    This question is hypothetical as no firm policy has been announced or, for that matter, even discussed by government. However, I don't believe that the government would try and increase the GST and my reasoning is that any change suggested by the federal government to the GST must be approved by the states and territories and none of the GST is retained by the federal government but is transferred directly to state coffers. I'm also sure that Andrews welcomed the question which would be a welcome distraction from all of his problems.

    I'm not in favour of any increase in the GST regardless of any softener to increase pensions unless the original agreement with the states is honoured. The original agreement was to do away with a large number of taxes such as sales tax, stamp duty, payroll taxes and other lesser income producing fees and taxes. Not all of these were cancelled with the excuse that the GST split-up was not fair.
    Lescol
    29th Sep 2020
    12:11pm
    DEFINITELY NO INCREASE in GST & instead I would like to see it ABOLISHED! Its not progressive and impacts the low income person much harder than the high income. I also feel the self funded retirees are the most effected!
    Tom
    29th Sep 2020
    12:44pm
    Wrong. GST is progressive.
    Wealthier people consume more and therefore pay more GST.
    Theo1943
    29th Sep 2020
    5:45pm
    Sorry Tom, a progressive tax is where you pay a higher percentage as your income increases. The GST is a flat tax. Flat taxes are easier on those who have more disposable income.
    Youngagain
    1st Oct 2020
    3:33pm
    GST is NOT progressive, Tom. It impacts hardest on those who have to spend most of their income to get by. High income earners can avoid GST by putting a portion of their income aside as savings to invest.
    Farside
    1st Oct 2020
    4:56pm
    it's pretty obvious people that Tom means someone who spends $100K per year will pay more in GST than someone who spends $20K per year.
    Youngagain
    1st Oct 2020
    9:16pm
    That is NOT the definition of a progressive tax, Farside. That person might be earning $400,000 a year, and only paying tax - at a low fixed rate - on only 25% if their income. Meanwhile someone earning just $20,000 a year is paying at the same rate on 100% of their income.

    Tom's argument sounds a bit like that of the churches who claimed a 'tithe' of 10% of income imposted equally on all parishioners. Of course that's rubbish. To the wealthy man, it meant a new car every eighteen months instead of every year. To the pensioner widow it meant sacrificing the children's lunches.
    Farside
    2nd Oct 2020
    2:31pm
    Youngagain, I'm pretty sure Tom understands GST is a consumption tax rather than a progressive tax. Your observation on proportionality are fair and there is no argument that spending is relatively more expensive for the poor. Tom's point tho is the wealthy spend their money more extravagantly than the poor and so pay more in consumption taxes.

    You may recall the recent remarks of Justice Perram "I may eat Wagyu beef everyday washed down with the finest shiraz but, if I really want my new home, I can make do on much more modest fare".
    Youngagain
    3rd Oct 2020
    10:09am
    Farside, I don't see how anyone can justify a regressive tax by claiming that the rich will pay more because they spend more. They should pay more because they EARN more, not because they spend more. And the poor should not have to pay up to 15% of their entire income, on top of any other taxes. The whole idea of the tax system, when first conceived, was that people's contribution to society should be relative to their capacity to pay - which is fair, because their capacity to pay is a measure of the benefit society affords them. Those who prosper in society have clearly enjoyed greater benefit, and should pay accordingly.
    thommo
    29th Sep 2020
    1:41pm
    The GST itself was never going to exist, as promised by John Howard as he went into the 1996 election. In his 2nd term, he introduced it at 10%, promising us all on hid dead mothers grave that it would never be increased. What a load of BS.
    Abbott promised us all he would not change the age pension at the 2013 election, but he Brooke that promise shortly afterwards, to the detriment of several hundred thousand pensioners.
    Never trust a lying politician.
    Buggsie
    29th Sep 2020
    1:56pm
    Thommo, never trust a politician, period, they ALL LIE every time they open their mouths.
    Having said that, I am willing to bet my next monthly income that an increase in GST will occur within the next 2 years, just after the next election is held. This despite which party wins government. Desperation makes for strange bedfellows.
    KSS
    29th Sep 2020
    2:02pm
    thommo, you are 'twisting' things here. The GST can only be changed with the full agreement of ALL States and Territories. Given the difficulty of that (you can always count on at least one regegade state) it was not an unreasonable statement to say the GST wouldn't be increased.

    However, you are wanting things to remain as they were in 1996. They aren't and grown-ups recognise that Australia may have to do things differently in the future.COVID fall-out may be the catylist but change to taxation system has been coming for a long time. Some would say it is way overdue for reform.

    Post COVID provides an opportunity that may never come again. Instead of more tinkering at the edges of an already impossibly complex system, the Government needs to review the entire system wholesale and have the courage to simplify it and make the changes that are so critically necessary.
    Couldabeen
    3rd Oct 2020
    10:58pm
    thommo, John Howard did go to the following election with the GST as part of the tax reform platform. The introduction of the GST meant that a very large number of household hardware items went down in price significantly. (The 10% replaced the previous 25.5% on such things as electronics, white goods and furniture.)
    The GST does no apply to raw foods including all fruits and vegetables. I can do a grocery shop with 20 to 30 commodities and there will be GST on only 4 or 5 (such as Arnotts biscuits or a roast chicken (hot)).
    Where it can bite is such things as our power (energy) bills and motor vehicle purchase and operating expenses.
    As explained by others, any changes to the rate of the GST requires full agreement among the States and the Commonwealth.
    We have several additional taxes imposed such as excises on alcohol and tobacco and then there's the Luxury Car Tax (this is taxed doubly when the GST is charged on the LCT. Queensland also has their own LCT on top of the Commonwealth LCT which is then hit with the GST on top of that.
    Jim
    29th Sep 2020
    2:21pm
    Here we go again re the GST the current federal government has to my knowledge ever suggested raising the GST, the push seems to be coming from the states, my understanding is that all the tax raised through GST goes entirely to the states, so where is the benefit for the federal government to raise the GST? I am sure there must be some benefit, maybe the feds don’t have to contribute as much funding in other areas, it doesn’t seem to matter which state or political party is in power there always seems to be a call for more funding from the GST % maybe we should abolish the GST and go back to putting sales tax on everything, not sure we would be better off!
    Mariner
    29th Sep 2020
    3:03pm
    Thanks Jim, you have done your sums and I agree with you. Look at the U.S., every State has different taxes.
    Fedup
    29th Sep 2020
    3:12pm
    I don’t agree that the GST should ever be increased. Prices have risen significantly since it was first introduced, so governments are in fact collecting a lot more in GST revenue than they have in the past.

    An extra 5% tax would make things difficult for a lot of people. Don’t forget it’s not only levied on discretionary shopping, but also on services that you may be forced into using. I was forced to pay a $200,000 legal bill which had $20,000 GST tacked on top. At 15% it would be a $30,000 tax and for crap service that I didn’t undertake voluntarily.
    Diamond Jim
    29th Sep 2020
    4:41pm
    No way! Self funded retirees on a fixed income will be severely affected by increasing the GST . Pensioners maybe would be compensated by lifting the rate of their pension but even that is still debatable. Who pays the price most for lifting the GST? It is always those on the lowest income and by putting the GST on food simply compounds the issue for our most lowest paid of workers. Think about this : a person earning $80000 a year and a person earning $250000 a year. They both want to purchase a $50000 new car. At a GST of 10% this price will be $55000. if the GST is 12.5% this price will be $56250 which is another $1250 more. Which person can afford this increase more? The person on the higher wage. Unfair! My option if the government wants to raise more revenue is to tackle the 500+ companies in Australia that pay NO TAX!! Stop always hurting the workers!
    Rae
    30th Sep 2020
    1:20pm
    Someone on $80000 can't afford a $50 000 car anyway. Half the problem we have is people using debt to live beyond their means.
    Youngagain
    1st Oct 2020
    3:30pm
    I agree, Diamond Jim. Maybe some can take issue with the example of a $50,000 car (though no reason why a single person or one partner of a childless couple couldn't save $50,000) but there are thousands of others. Appliances, furniture, home repairs... everything would cost a lot more and the burden would fall squarely on those least able to afford it.
    DaveL
    29th Sep 2020
    6:39pm
    There are two things the government can do, get rid of the GST and ALL Franking Credits. Australian Companieis who pay franked dividends pay no tax.
    Youngagain
    1st Oct 2020
    3:27pm
    DaveL, clearly you have no idea how Franking Credits work to boost the economy. I do think abolishing GST would be a good idea. It's a regressive tax and patently unfair.
    inextratime
    29th Sep 2020
    10:00pm
    This article is a grenade chucked in by YLC to stimulate debate and how well its worked. LOL
    Ian202
    30th Sep 2020
    6:19am
    Well its working. I did post before reading all the comments. It seems many just want to politicise it without thinking all sides of an argument. Lets hope the journalists at YLC and Laurel Irving can ask a sensible question of politicians without it being an accusation that they are secretly plotting and ask the question 'should the burden of tax revenue just fall on some through their work or on all through their expenditure?'
    Ian202
    30th Sep 2020
    5:58am
    An increase in GST is a must. Only about 50% of population pay personal income tax and medicare, all for 100% of population. Tax should be on consumption not on income. Eliminate medicare LEVY, drop personal income tax rates, increase age pension and all Centrelink payments. Increase GST and include a split for Australian Govt, say 20% of GST, to cover costs of health and increased aged care. 15% maybe the best GST rate if changes are made. ps I'm on the age pension.
    Youngagain
    1st Oct 2020
    3:23pm
    So you are on the age pension, Ian202? And I note you say it should be increased. What about low income families struggling to get by? What about self-funded retirees and part pensioners whose incomes are low and who will suffer a huge impost with little or no compensation? This sounds like a case of 'I'm okay, stuff you'.
    Rae
    30th Sep 2020
    12:44pm
    No. We are having tax cuts. Tax cuts. Tax cuts. Always cutting taxes. So this is just silly talk by journalists.

    We cut taxes don't we?
    Farside
    1st Oct 2020
    5:03pm
    of course, cutting taxes has worked so well in the past - our Treasurer admiring Thatcher and Reagan fondness for trickle down and austerity. Heck, why not do away with taxes altogether and see how that works for us.

    https://www.tai.org.au/content/taxing-our-way-prosperity-nordic-countries-reality-expose-anti-tax-ideology
    wogaroo
    1st Oct 2020
    9:37am
    having a coffee with friends yesterday afternoon, and i noticed that we all came from different positions in life. We all spent about the same on our outing and all paid roughly $2 GST on our outing. group is made up of 2 pensioners 1 self funded retiree, 2 businessmen (2 other pensioners were unavailable) the prospect of raising GST was raised in conversation. By the way we meet about once a month for coffee. Been friends for years. The crux of all this is that we all paid the same GST. As one of the business men said and i quote: it is not fair on low income earners/pensioners to pay as much as i do. Now this guy has done really well for him self, and there is no jealousy between us. What he did also say is that any one under $50-70.000 should be given at once the difference in the proposed increase of the GST if it were to happen. What was also welcoming was that he did not want more business tax cuts.It really resonated with all of us.
    Farside
    1st Oct 2020
    5:05pm
    your progressive friend is a rarity these days wogaroo
    Spondonian
    6th Oct 2020
    9:47pm
    As usual self funded retirees would be left carrying the can .


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