Lot's Wife Edition 6 2015

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12 POLITICS 500 Word Challenge BY HAREESH MAKAM For Essential to Australia’s Financial Woes Increases to income and corporate tax hurt, they can damage household budgets and they can leave citizens in precarious financial positions. However, the GST is a regressive tax and by that token does not nearly harm the spending patterns, investment and budgets of ordinary people and companies. Have you ever seen or spoken to someone who does not buy essential and non-essential goods or services because of a 10% surcharge due to GST? No. It’s farcical to even ponder a world where anyone (poor or rich) would re-configure their spending patterns because of a 10% tax on the things they purchase. If you follow that logic, and most people do, then by extension a 5% increase in the GST and the broadening of its base to include all goods and services seems fair and harmless to any income earner on the street. First of all our budget predicament is to a large extent serious. Those who tell you that a AAA credit rating, and having the lowest debt to GDP ratio in the OECD are signs that our fiscal position is solid are gravely mistaken. This is because they have a lack of understanding of the Australian economy. Our economy is two speed – we rely on banking and finance industries to stabilize and hold our economy together while another industry stimulates private economic growth. However, in recent times we have seen mining dying out, manufacturing die while agriculture is decomposing in it’s grave. Furthermore, very few foreign investors want to confidently support a country in economic transition that promotes a weakening currency and houses high wages and taxes. We are becoming as Keating calls it an ‘industrial, economic graveyard’. As a consequence, government revenue has sharply fallen, debt has increased and we will be experiencing a fiscal crisis if we do nothing in the short-term. The solution in the short term is more government revenue – but more money for the states in particular. According to CPA Australia, broadening the base and increasing the GST to 15% would add $42.5 billion in the first year to state coffers and an extra $27 billion dollars every following year. The increase and broadening alone would offset the government’s $80 billion cut to schools and hospitals and provide more long-term economic stability "Have you ever seen or spoken to someone who does not buy essential and nonessential goods or services because of a 10% surcharge due to GST? No." to State budgets, which are also facing a hit. Moreover, this rise in the GST intake would allow the Commonwealth to reduce income and corporate taxes as the fall in government revenue (by this decision) would be offset by states becoming more fiscally independent. This will allow the Australian economy to be more competitive, encourage investment and stimulate job growth into the future because as has been previously mentioned non-regressive taxes hurt the finances of people the most and therefore lead to less confidence and growth in the market. Overall, the GST and its reform will provide us with $100 billion a year (25% of federal government revenue) whilst staying regressive and harmless to household budgets and spending patterns. It is by virtue, a policy which herald’s great benefit for relatively little pain. That readers, is the fundamental essence of good public policy. But it is only the start of the tax debate.
POLITICS 13 This month’s issue: Should we raise GST? Against The GST should not be increased BY JULIA PILLAI The current state of the Goods and Services Tax in Australia is by no means perfect; there are still controversies over exemptions, and lack of exemptions (such as the GST on sanitary pads and tampons... grr) which seriously need to be fixed. Nonetheless, I think that a 10% tax on non-essential items is firm, but fair tax. Exceeding 10% however, is quite regressive. We must remember that the GST is a tax that everyone pays, regardless of age, income, if you are on welfare or if you aren’t on welfare. It is true that for some of us, an increase to 15% or even 20% is fair for our situations, but it probably isn’t fair for many others. While this tax is for non-essentials we must remember that things that are considered ‘non essential’ are still important. These include things like clothes, soap, shoes, fuel, Myki fares, laundry powder, tampons, gas and electricity bills, things that are far from luxury items. Obviously, an increase of GST will mean that these things will be at least 5% more expensive, and this does increase the cost of living for everyone including people who may already be struggling financially. This could mean more people on welfare, less people paying tax. We must also be aware of how the fear of the cost of living rising will affect consumers. When people have to pay at least 5% on many products- which as established earlier, are not necessarily luxuries, they have less money to spend on other products. Yes, I know that the ‘age of entitlement’ is over, however, in order for the economy to work, we do need people to spend money on non-essential things, perhaps not helicopter rides, but the more people buy things, the more people have jobs selling things, the bigger the economy, the more money the government has, the more the government can spend on helicopter rides industries that will build Australia, the more people get jobs, they get money, they spend the money, #capitalism. Retail therapy is important...for AUSTRALIA and a 5% increase on a sizeable amount of things people actually buy might make them spend less. Ultimately, the issue with a GST increase is that there are fairer ways to increase government revenue. It’s somewhat concerning that a GST increase is the first thing that the "While this tax is for nonessentials we must remember that things that are considered ‘non essential’ are still important. These include things like clothes, soap, shoes, fuel, Myki fares..." government is looking at- what about taxing corporations that ruin the environment, what about making sure that large companies don’t evade taxes (looking at you IKEA...I KNEW that diabolical flat-pack furniture wasn’t the only reason why you are so affordable... sneaky), and for the heck of it, perhaps making sure our mate Gina is paying her share too. Increasing the GST is a last case scenario; reviewing other taxes, and making sure that people are paying them is more important. Who knows after doing that, the government might have just enough money for us all to get helicopter rides, GST free. They are very essential.
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