Australia, economically, is one of the strongest economies in the world. The debate on how to develop the economy even further is, and always will be a never ending one amongst Australia, and also the rest of the world. In 2011, Australia was the 13th largest national economy by supposed gross domestic product (GDP). This year its economy was the fastest-growing in the developed world for the first three months of 2012. Experts suggest that the answers lie within the tax system, to further improve the economy. The Goods and Services Tax (GST) in particular has come under the microscope of recent time, as to how changes to the GST could benefit Australia. Small tinkering’s to the current taxation system can definitely raise …show more content…
An Economic Reforms Priority research report issued by the Grattan Institute dissects the possible benefits of tinkering with GST. It calculates that the GST-exempt goods and services equate to about 40 per cent of consumer spending, which means the government gives up about $30 billion a year in revenue. The institute recommends the GST be applied to all of these exempt goods, thus the additional revenue could fund substantial income and corporate tax cuts that would increase economic growth. This would raise an extra $31 billion a year in revenue and add $20 billion a year to the economy or an extra $870 a year income for everyone. The tax system would be far simpler for the Australian people. * John Daley, Grattan Institute, 2012
Inefficient, or misinterpreted taxes are complicated and don’t ensure a certainty of collection. An analysis by the Grattan Institute shows that if the Australian governments collected more revenue from efficient taxes that encouraged economic activity, and less from inefficient ones, GDP could increase by $25bn a year within a decade. There’s also the certainty of the non-taxed money that’s been hiding in the large underground cash economy in Australia, with estimates of unrecorded income tax to be approximately 15 per cent of official gross domestic product (GDP) back in 2005. The lowering of income tax combined with a broadening to the GST base would see tax evasion having far less rewarding results, as the
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Microeconomic policies promote the efficient operation of markets as the most effective mechanism for achieving efficient allocation and use of resources, raise productivity and increase aggregate supply. Increased aggregate supply will result in decreased inflationary pressures and increased international competitiveness as Australian producers are able to supply international markets with a greater volume of goods at lower prices. Greater export earnings will consequently improve Australia’s terms of trade, and will decrease the current account deficit. Microeconomic reforms that promote increased competition in both domestic and international markets will also encourage greater innovation and cheaper product, which will benefit consumers. Increases in productivity and aggregate supply will also result in improvements in labour productivity. Higher productivity and greater export earnings will result in wage increases for Australian labour, and subsequently living standards will improve. As a result of higher wages, aggregate demand will increase thus creating further opportunities for increases in
One benefit of government intervention in Australia is the more efficient allocation of resources in the market. Australia’s current policy for this reallocation of resources is to take money from select industries using taxes and
Good afternoon, allow me to introduce myself. I’m Braiden Simpson, advisor to the treasury. Thank you for inviting me here to speak to you today about the current economic climate and to discuss well-structured policies and strategies to ensure the sustained wellbeing and growth of the Australian economy. We are all aware that through the introduction of strong policies that stimulate economic growth, policies that protect jobs, encourage job creation and the need to keep our economy stable through well managed macro-economic policies are what is required to ensure a continued advanced Australian welfare. Macro-economic policies are concerned with policies issues and objectives that affect the whole of our economy, however there are three main
The author firstly points out the problems of tax system. Too complicated, too many special allowances and specific taxes, and too much money drained out of the pockets of working Australians. The author cites many examples, such as national insurance, tax accountancy guides called ToUey's, the Byzantine complexity, the final report, The Single Income Tax, to state the necessity to propose a very radical yet necessary change to how the government raises taxes, aimed at making the system cheaper, fairer and more legitimate. The cost of complexity is high and, in addition, complexity has led to the tax system having lost legitimacy as many people do not even really understand how much tax they should pay, let alone how much others should pay. That opacity, a direct consequence of complexity, inevitably leads many to suspect others of not paying their fair share. Data is listed to support the view that the complicity of tax system has damaged the legitimacy of the
Outline: This article discusses the economic growth within the australian economy and its effects. It is stated that the Australian economy’s economic growth is driven mostly by immigrants rather than natural increase. The business bible shows a growth of average of 1.42 per cent being the weakest in the past 15 years. Slower growth in the economy leads to slower growth in GDP, lower standard of living, harder to reduce budget deficit and reduced productivity of labour. The drive for smaller government spending doesn’t rapidly increase standard of living. The federal budget will be hard to surplus back into.
The most obvious and enduring argument for supporting this reform agenda of increasing the GST’s rate and broadening the base is that it will increase federal taxation revenue by an estimated $44 billion. Proponents argue that this increased revenue could be put to productive use by state governments through covering shortfalls in education and healthcare budgets and that it would ultimately act to make the budgetary outlook in Australia more sustainable. Moreover, many adherents suggest that the issue of repairing Australia’s current account position has become far more urgent in recent years as a result of the large Keynesian stimulus expenditures performed in response to the Global Financial Crisis (Karunaratne 2010). Paradoxically, through using budgetary repair as the primary justification for this reform, supporters of modifying the GST are subtly undermining their own argument once the corresponding weaknesses of the Grattan plan are examined. Due to the aforementioned regressive nature of sales taxes, the GST reform package includes targeted compensatory payments and tax cuts that are designed to ensure that the bottom 20% of households by income are not severely crippled by the increased tax burden that a higher GST would produce in isolation. This necessity to
The United Kingdom has developed to become one the highest taxed nations across the globe despite impaired competitiveness and stifled economic growth. Unlike most OECD countries that have lessened their tax burdens since 1997, UK taxation has increased, which has resulted in reduced competitiveness of the country’s position as a low tax regime. The other characteristics of UK taxation include forcing taxpayers into higher rate tax bands, which enforces higher tax rates for more people. However, in the past few years, there have been debates and controversies on whether the United Kingdom government should restore the 50 percent additional rate of income tax. This debate or controversy has been characterized with arguments and counter-arguments in favor and against such a move respectively.
Australia’s tax system is in dire need of reform and the way in which the system is altered is set to be one of the major topics of debate in the coming year, leading up to the Federal Budget in May and the Australian Federal Election in the latter half of the year. One of the proposals is an increase in the GST from its current 10% up to 15%, as part of the nationwide tax reform.
There has been confusion about what a carbon tax is and does; perhaps the word ‘tax’ is to blame. Unlike most taxes it’s not aimed at raising revenue but at changing behaviour, to make it more likely that Australia will meet its targets for reducing greenhouse gas emissions. Australia has more reason to do this than most other countries. We are the biggest per capita emitter of carbon dioxide among developed nations, and the world’s 10thbiggest emitter overall, despite our small population. In 2009 we emitted 19.64 tonnes per person, compared with the world average of 4.49 tonnes or China’s 5.83 tonnes. We have already experienced the effects of more extreme weather – from droughts and bushfires to floods, and as a coastal nation we
Basic goods like rice, sugar, some meat, vegetables, basic medicine and baby powder are GST exempted. Due to the exemptions, the calculation of GST is done at the product level and not at the total consumption amount. GST charges also must be displayed clearly to show the amount charges so that it is clear to the consumers on the products charged and exempted from GST. All these measures will improve transparency at all levels and improve collection of overall taxes. According to the Custom’s Department, government expects collection of GST to be above RM23billion by end of the year. GST is expected to contribute to the total target of RM45.44billion tax collection for the
GST will reduce tax burden on producers and foster growth through more production. This double taxation prevents manufactures from producing to their optimum capacity and retards growth. GST would take care of this problem by providing tax credit to the manufacturer.
I woke up one morning to prepare for school; however, I realized that the airwaves were filled with anger. Most people in my neighborhood were glued to their radio sets, waiting impatiently on the government to confirm the rumors, about its decision to replace the current sales tax rate with a new one; the Value Added Tax. Around midday, the government finally announced its decision to amend the tax system and outlined in detail various segments of the new tax policy. Under the new tax structure, taxes will be levied on every supply of goods and services made in Ghana, every importation of goods into the country and the supply of any imported service. The new tax system is meant to
The increase in VAT to 20% is a major issue for our concept, as it results increases in cost of goods. This is due to the coalition’ government’s policies of reducing Britain’s budget deficit, causing reduction in disposable incomes as wages stagnate. (Finch, 2010) This will fuel higher inflation which at 3%, is above the 2% target, fuelling higher costs for basic goods. Furthermore unemployment averaging 7% is an important issue to take into consideration for our business. The consequences of unemployment results with consumers struggling with daily expenses, therefore unable to purchase premium goods.
This article is generally informing Singaporeans the importance and the need to declare and pay the taxes of their goods or souvenirs purchased overseas when they return home from their holidays. The items are subjected to a 7 percent Goods and Services (GST) tax regardless whether the goods purchased are for their own use or not. However, the government has implemented a form of GST relief for Singaporeans to allow them to bring a certain combined total value of goods purchased to be brought back home without having to pay tax. The GST relief is granted to Singaporeans for goods valuing up to $600, provided they spend more than 48 hours