The Meeting Place

Get Ready For Less

PwC analysis to be released on Tuesday shows taking the GST to 12.5 percent and extending the tax to fresh food, education and health would raise $40 billion a year, enough to help the states axe taxes that could hold back the post-pandemic recovery. Shane Wright, Brisbane Times.

Personal Finance Commentator Noel Whittaker advised against running down assets, such as buying expensive holidays or caravans, to qualify for the full Centrelink benefits. The value of Centrelink payments will erode if inflation picks up. A 2.5 percent rise in the GST is in effect inflation. The LNP government may increase payments by the equivalent amount to compensate, but highly unlikely.

If the GST is raised, and you rely on Centrelink payments, you will have less.

This from the same article: Federal Treasurer Josh Frydenberg, facing a budget deficit of more than $200 billion this financial year, has made clear the states will have to cover the costs of any reform.

 

11 comments

If GST is raised, I am not sure how I will manage.  It's been hard enough with just the Age Pension (no other income) trying to keep up with the prices which have all gone up during the pandemic.  I hope those on Jobseeker will not be put back on their previous income or they will probably starve and end up homeless.  It's always those with the lowest incomes who suffer the most.  Time for a universal basic income, Ithink.

patti - I have a feeling that a universal basic income would not be higher than today's full age pension. The positive would be the allowance of a higher income from other investments without losing any basic income. It would encourage people to save more for their old age than the present system where the saver gets punished.

States agreed to get rid of taxes when the GST was first introduced but at least two taxes, stamp duty and payroll tax, were retained. If the GST is added to food or increased there is no guarantee that the states will cancel more taxes, past history shows this. Any change to the GST can only be done with agreement of all states and because of the way the GST is distributed, not all states are happy with the distribution. WA had a large income from mining royalties and, at one stage, had 0.30¢ in the dollar raised while SA and Tas were granted well in excess of the GST raised in their states. Add to that the Labor states under a Coalition federal government which may not agree because of politics.

As to the reduction in buying power for those on fixed incomes, perhaps an increase in pensions similar to what Gillard did when the carbon tax was introduced could be considered. It should be comparitively easy to calculate the increase for the average family should food be included in the GST or raisng the percentage to 12.5%.

 

I would also note that no government, state or federal, has indicated any alteration to the GST. Comments about a possible rise have come from journalists and commentators without any attribution to a "government source".

 

I agree with you Horace Cope that this yet another journalistic comment

...am rather sick and tired of all these "eggspurts"

But then again it may give our pollies ideas.

Surely the Australian Federal and State Governments know the detrimental effects to raising the GST will have on those on the OAP.  Raising the GST and lowering pay taxes might be effective for the working population, but it will become a real problem for those not working.  Yet again, the Governments are targeting the retirees and pensioners.  There is something wrong with this picture, and I am not sure I am understanding it.  We retirees and pensioners have put in our time, worked hard all our lives, struggled to pay off our mortgages, paid exorbinate taxes of every kind, and helped build this nation to what it is today, yet the Governments appear to think we deserve nothing, and should not enjoy a comfortable retirement, no matter how much we have put in, or what we have done for the country.  Can someone please explain why this appears to be the case?

 

If the GST is to be increased I wonder how hard it would be to do it in stages, like the Super Guarantee Contributions.

Would it be simple enough, or too complicated to consider.

Any single budget that sets out to solve all our post virus financial problems in one go will see a change of government soon after.

Not that it would improve things, just an expression of disatisfaction at our pollies extremely limited thinking.

 

The GST question will be raised continuously, never mind who's in Canberra, till we are on a level like NZ or other OECD countries. We already have the highest price on alcohol and tobacco outside Scandinavia. Was in my old place in Europe last year and I paid for 24 5ml cans of beer $A25, bottle of Scotch $A22, packets of smokes (I no longer indulge) are $A10, GST in the country is 9% with fresh produce 3%.

Maybe I could agree with GST on everything with no excemption at 10%; once the percentage is changed they will increase it every 2 or so years like in Germany, Britain and so on.

On July 1st, the GST celebrated its 20th anniversary since it was introduced by John Howard. This from the ABC:

The GST now raises around $70 billion a year, which is about 13 percent of Australia's total tax haul.

It is well short of what it could be, and has been in decline since it was introduced thanks to our spending habits — more on housing, education, and health, less on GST-attracting frippery.

NSW Treasurer Dominic Perrottet is joining other premiers in a big push to raise the GST.

The Grattan Institute argues that broadening the GST to include all food, health, and education would be more efficient and reduce costs for business.

However, the pollies are ducking and weaving over the issue of modifying the current GST. Prime Minister Scott Morrison this week dodged the question, after declaring last year: "We're not doing it."

But COVID-19 changes a lot of attitudes. Let's wait and see.

Budget deficit $200 billion but income tax cuts still on the agenda, so increase G.S.T. to help pay for them, Robin Hood in reverse, the poor can subsidise the well off.

GST raises it's ugly head every time we're around 18-24 months out from a Federal Election.  Our next one is due in 2022.

I'm sick and tired of 'boffins' declaring that the GST should rise by 2.5%, or whatever they 'think' it should be.

I don't believe that fresh food that is in the currently Exempt category should have GST added to it.  This could mean that most people would be getting their green thumbs out of retirement and growing their own fruit & veges again if they have enough land to do so.

If there is an increase to the GST, then the income support payments and pensions should rise in line with any changes.

Our income support and pensions are a pittance as it is.  The JobSeeker payment for 60+ 'should be' at least $300 per fortnight more (in line with the age, disability and carer pensions).  Many of these people cannot find jobs and they are now in a 'waiting pattern' until they are of the Age Pension eligibility age - some up to 7 years.  They also lose the free car rego, eligibility for the $2.50 concession Opal Card (unless they apply with their Senior Card), and many other concessions, which makes it doubly hard for them to keep a car on the road, and pay the full price for Sydney public transport - which they have to do just to look for a job.  I don't know about other states.

The pensions should be raised by at least $150 pfn for singles & $100 pfn each for couples, especially for those who don't have 'side incomes' of super & other income streams.

 

On a lighter note ...

In New Zealand, GST was introduced by the Labour Government on 1 October 1986 at a rate of 10% on most goods and services. Since its introduction, GST in New Zealand has had two increases. On 1 July 1989 the rate increased to 12.5% and on 1 October 2010 it increased again to 15%, to pay for income tax cuts by the National Government.

The full pension for a single person with supplements is: $944.30 per fortnight.

A couple: $711.80 each.

A 2.5% increase in payments should there be an increase in the GST would be $23.60 for singles and $17.80 each for couples.

Woolies T-Bone is currently $24.00 per kilo. Adding 12.5% GST would see the same costing $27.00 per kilo, or an extra $3.00. And that's just one food item.

By far the biggest cost in the price of an Australian beer is Australian Government tax. Tax accounts for almost half (42%) of the price of a typical carton of full-strength beer. Of the $52.00 retail price, a whopping $22.05 is a tax (source, The Brewers Association).

An extra 2.5% would... I stopped there as I was depressing myself.

I don't drink beer or wine for that matter, I don't eat T bone steak either.    

Think Food Vouchers would work out well to supplement the Pension, in the 60s secretaries and clerks in the UK used to have Food Vouchers besides the salary, worked out very well.

Think the Government needs to think outside the box to help Pensions go further.

How dare you eat and drink well Veritas.  Thats not what the Government had planned :-) 

 

How about some jacket spuds topped with Beluga caviar and a  bottle of Veuve Clicquot to go with that T-Bone steak?

OK, we all have to pull together...all means all...as in politicians and bureaucrats.  They’re always on about the trickledown effect so let’s start with them.  Slash their salaries by 30% to 50%,  they’ll still live on the hog.  Australia can no longer afford the dead weight of retired politicians so cut those pensions and perks off, they’ve all got secondary incomes.  

11 comments