Widening the Tax Net !

It is becoming painfully obvious that the Australian public are losing patience with Prime Minister Tony Abbott and Treasurer Joe Hockey.   Their attempts to rejuvenate the Australian economy are not producing results and it no longer suffices to blame opposition from Labor and the Greens for the lack of progress.  The policies suggested have simply not been good enough or presented in a manner which the public will accept.

One of the anomalies that most people do not understand are the GST exemptions that apply to some services.  When they call a local cab company they are charged the GST, but when they choose to call Uber another citizen arrives in his or her private car and delivers them to their destination - without charging the GST.

When they take a holiday, either they book in to a resort and pay the GST attached to their bill, or they book a room in someone's private home via Airnb - and dodge that ten percent surcharge.  Even more surprisingly, when they watch a movie on their television via Netflix it is GST free, but if they hired the same movie from their local video store they will get whacked the surcharge.

If any service is delivered in Australia it would be reasonable to expect that the GST tax would apply equally - to deliver a level playing field.  If it takes a law change to achieve that result, so be it !

We do not have to look far to see how someone else fixed a similar problem.   The New Zealand economy is going gangbusters and they have moved the impetus of their tax regime onto collecting tax via their GST rather than through income or company tax.   The GST tax net was widened to include food and services, and the only exemptions are housing rents, donations to charities, gold bullion and financial services - and their tax rate was increased from ten to fifteen percent.

Lowering company tax and individual income tax and collecting tax by a higher and broadened GST improved the investing climate and fostered expansion of industries, improving the jobs market.  This greatly improved tax collection enabled pensioners and the low wage people to receive adequate compensation , hence the benefits are spread widely.

New Zealand's prime minister, John Kay is popular and held in high esteem.  His approach to making changes to his country's economy was to speak candidly to the people, explain the dangers it was facing and present a fully costed plan for public approval.   He allowed plenty of time for this to be closely examined - and there were many grumbles and some opposition - but the vast majority gave it approval and now the Kiwi dollar is fast reaching parity with it's Australian dollar exchange rate.

Few would disagree that the Australian economy has a problem of income failing to match outgoing.  It will take bold measures to apply the necessary correction and so far the steps taken are seen as "dithering " !   They lack credibility and the steps taken by way of explanation have lacked conviction.  Even the government backbench has seemed lacking in uniform support for some of the measures proposed.

It may be necessary to take the voting public into the government's confidence and formulate a visionary plan that would need public support to succeed.   Such a plan would need credibility and be fully and accurately costed, and should the opposition and the Greens continue to play politics and block passage through both houses it would become necessary to dissolve the parliament and take the issue to the people.

New Zealand has solved it's problems by boldness and common sense.  That same formula is badly needed to fix the Australian economy !