Tax rumblings !

The Grattan Institute has suggested that the time has come to consider changes to the Goods and Services Tax ( GST ).    It wants the GST to be expanded to apply to health, education and fresh food, and claims that this would inject an additional $ 20 billion a year into Treasury coffers.

These are the sort of rumblings that opponents of the GST voiced way back in 2000 when the concept was first mooted. At that time, a tax of 10% was set in concrete and what were considered " the essentials of life " were excluded.   Despite changes  in the political parties holding office since, these promises have been honoured by both sides of politics - and Australia must be the only country in the world which has not increased the rate of it's consumption tax - nomatter what name is used to describe it.

It is suggested that by widening the tax, a decrease would be possible in both corporate and income tax levies.  This seems to ignore the fact that both of these are Federal taxes, and the GST is really a state tax, collected by the Federal government and disbursed to the states under a per capita formula.

This suggestion ignores the fact that extending tax coverage to health, education and fresh food would widen the net to pensioners, low income earners and those with children at school - who would get no benefit from helping the corporate sector or a decrease in personal taxation.  Tax exemption levels now no longer require  such people to even fill out and lodge a personal tax return each year.

Fortunately, both the major parties - and even the Greens - have given this suggestion a resounding " No ".

We are seeing entire countries on the brink of bankruptcy when we watch the television nightly news and in most cases these are caused by  continued deficit spending coupled with an inefficient tax system.   We are also seeing the type of human reaction when fiscal measures that are deemed grossly unfair are imposed on the citizens.    We are not seeing this type of rioting on Australian streets because - while nobody likes paying taxes - our system is basically fair and accepted.

That situation could change if the tax man invaded the " essentials of life " arena with a tax extension !