There’s been a lot of talk in the last couple of weeks about increasing the GST rate from 10% to 15%. The government claims it is just one option, and has no plans to do it, but it is the way of governments that these conversations are introduced into society to prepare it for the possibility, if not the likelihood. Unfortunately I think it’s a near certainty that the GST will be increased sometime in the next 18 months.
I won’t vote for any government that does that. There are many reasons to oppose it – it’s a regressive tax after all that hits those who can least afford it most. It’s a further expression of the prevailing LNP orthodoxy in that the rich are left virtually untouched while the poor cop the brunt of revenue raising. What irks me more than anything else though is that it’s lazy policy-making.
Raising the GST is a bit like putting the prices up. You’re struggling to make ends meet? Okay, increase the prices by 50% (which is what this is). The first problem with that is that it sets a precedent – and an unwelcome precedent. What happens next time the government figures it’s not pulling in enough revenue? Does the GST creep up again? Do they broaden the base? Or both? Once we start with this where does it stop?
The second problem is that it’s unnecessary. It’s a headline action to a more complex set of circumstances.
When I was consulting a large part of my work was related to improving efficiency and productivity. It has the same result – more profit – but rather than taking the lazy route by increasing prices our approach was to streamline processes and remove inefficiencies. There’s always gains to be made there, and often quite substantial (though sometimes people are hard to convince of that).
Now I’m sure that the Australian government and bureaucracy could do with some streamlining, but in this case there are savings to be found elsewhere. Unfortunately the government won’t go near them from a combination of politics, vested interests, and the orthodoxy I wrote of before.
The fact of the matter is that the money can be made up and brought into government coffers in a much fairer manner. For a start I talk of the tax-breaks on superannuation that keeps getting talked about by the commentators (without anything ever happening).Then there’s tax on the multi-nationals, which is pitifully inadequate. And let me add to that reform of the negative gearing policy (which would benefit the country beyond the money it would save).
Now the reason nothing ever happens is it just seems too hard. It’s a lot easier to increase GST from 10% to 15% – a bit of white-out, a stroke of the pen, and it’s done.
For this government it’s very difficult politically (I suspect a Shorten led ALP would find it similarly undoable). From the day Abbott was elected the orthodoxy has been to protect the top end and big business, and take from the bottom end. It’s disgraceful really.
The fact of the matter is that the inequities – and opportunities – I have described focus more closely on the top end of town. They who can afford most are given the most breaks.Tax breaks on super favour high income earners, and you have to have a reasonable income to have a negatively geared investment. Enough said about the multi-nationals.
Some of this is blatantly political. The high income earners are the LNP’s heartland. They don’t want to be putting them offside. It’s justified by a flawed but much promulgated argument about incentives.
The argument goes that if we tax higher incomes too much it will act as a dis-incentive to people to strive. What a load of bollocks! I’ve never met a person who knocked back a lucrative job because they would be taxed too much. It would have to be a very stupid person to do that – the benefits, after all, are much greater than any alleged (and spurious) negatives.
Unfortunately the argument seems to go unchallenged. It’s the justification for so much, yet is just so much rubbish.
Let me make it clear I’m not advocating higher taxes for high income earners. I was once one myself (and, to put it in perspective, I still have a tax debt from those days). In general I believe we should strive for smaller taxes to encourage economic activity. What I do propose is a fairer spread of the tax burden.
The GST is not the answer. It’s a clumsy, regressive tax entirely without finesse. In fact we can leave most of our taxes alone. The revenue deficit the government complains of could easily be made up by acting on any one of the options I wrote of, and more fairly. (While we’re at it, let’s tie tax brackets to CPI). That’s the answer, but no-one is interested in it – and so one day soon we’ll wake up to a 15% GST and the rorts will continue.
That’s why I refuse to vote for any government advocating a hike in the GST.