" The tax man cometh ! "

There is a suggestion being promoted in tax circles that should send a shiver of real fear down the spines of every person in this great country.

The Australian Industry Group is agitating for changes to the Goods and Services tax ( GST ). It wants either the base rate of 10% increased, or the tax base broadened - or both !

John Howard introduced the GST back on July 1, 2000, and at that time the Australian public surprisingly approved the idea by returning him to office at a general election.  The tax rate was set at 10% and food was excluded - but there was also another benefit that was part of the deal.

This tax was to be collected by the Federal government, but the proceeds paid to the states to compensate them for giving up some state taxes that were considered harmful to the economy.   This included two banking taxes - but the one that would most benefit the public was to be the repeal of stamp duty.

The states were given a five year adjustment period to factor in the repeal of stamp duty, but when that time came - they reneged.  They refused to honour their part of the agreement - and so we are still stuck with this regressive tax - and we also pay GST.

Once again, this suggestion of increasing the GST and/or increasing the tax base is being promoted as a way of replacing some state taxes.     We have been down that road - and that old expression -  " Once bitten, twice shy " comes to mind.

There are negative outcomes likely if the taxation base is broadened - because the only real option for collecting a lot more money that way would be to apply it to food.    We are already struggling with food prices soaring - and with a world food shortage option looming - the last thing the average household needs is to see the supermarket shopping cart bill rise by ten percent.

And that ten percent GST has so far been set in concrete - and in that respect we are probably the only country in the world to honour that initial agreement.

Such a tax exists under many names.   We call it a GST.  Others call it a " Value added tax " - VAT.  
Other governments have tried to solve budget problems by raising the tax rate - and in some other parts of the world varied rates apply - and in some cases that is nearing 30%.

The Treasurer has stated that he has no plans to either raise the tax rate - or broaden the base, but by the look of the world economy we are all in for a rough ride - and now this suggestion has been made there will be some in government circles who will scratch their chins and speculate on the opportunities offering.

Just as Paul Revere jumped on his horse and raised the alarm by shouting " The British are coming " - now is the time to head off any talk of interfering with the GST by warning that " The tax man cometh " !

This is a bad idea !      Stop it dead in it's tracks - right now !