A GST will make a massive difference to money in the economy 218



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It’s time to raise the GST say many of the experts and economists throughout Australia and today, the media is pointing to the New Zealand economy as a shining example of what happens when the GST is raised.  Dr John Hewson was on the TV this morning discussing the incredible benefit that the GST brought our nation, and the success New Zealand are seeing, but raised an eyebrow at the question of whether he thought it would fly in Australia in the next political term.  But we missing the power of the multiplier effect of money staying in and sloshing around in our country by being scared of using the word “tax” right now for fear of losing votes?  Does Australia NEED a rise int he GST more urgently than even we are willing to believe?

When you sit back and really listen to the difference between Australia and New Zealand, what could  be perceived as a simple rise in tax rates is actually a massive cash injection into the economy that has a multiplier effect on the dollars themselves.  Do you think we should expedite the rise in the GST on these grounds?

In an News.com article, HSBC’s chief economist and former Reserve Bank economist, Paul Bloxham said “We can learn a lot from the Kiwis.  They have done exactly what we need to strive to achieve. We need to shift the tax base away from being focused on household and corporate income toward more efficient taxes like the GST.”

The difference between Australia and New Zealand’s economies is palpable at the moment, with our “lucky country” feeling the pain of very high tax rates of 45 percent in the top tax brackets, high by world standards, discouraging workforce participation; additional levy payments on highly earning people; relatively high corporate taxes being allegedly avoided by many international corporations trading here, and a budget deficit that is growing not shrinking despite considerable lip service by the government about needing to cut costs.  Many of our core national industries are in decline, and some are just up and leaving our country.  Unemployment appears to be fairly stable, with March seeing some improvement on recent months, but it is far from the buoyant economy we lived in six years ago.

In contrast to this, New Zealand has a top tax rate of 33 percent, making earning money more attractive.  This in turn allows every person in the economy to have more money int heir pocket to spend on consumption, property and entertainment, meaning the wheels of the economy turn better.  This consumption is then taxed by a 15% GST, which allows all that money to slosh through the economy and into small business pockets to create opportunity on its way to generating tax income for the government.  As you can see, the power of a dollar that stays in the economy sloshing around is much greater than than the value of a dollar earned and paid to the government.

When you think about it this way, if the government was to drop the income tax levels to levels similar to New Zealand would a rise in the GST be just what our economy needs? Share your thoughts today!  

Rebecca Wilson

Rebecca Wilson is the founder and publisher of Starts at Sixty. The daughter of two baby boomers, she has built the online community for over 60s by listening carefully to the issues and seeking out answers, insights and information for over 60s throughout Australia. Rebecca is an experienced marketer, a trained journalist and has a degree in politics. A mother of 3, she passionately facilitates and leads our over 60s community, bringing the community opinions, needs and interests to the fore and making Starts at Sixty a fun place to be.

  1. If decent compensation was given to low income earners and those on welfare I might agree but they want to take money off us..not give us more and it should never be on fresh food

    3 REPLY
    • I think it’s time that the government shift responsibility back onto parents to pay for their children’s upkeep. Does the average person realise when they talk about tax minimization that while we the taxpayers are paying for worker’s children that they are buying second and sometimes third properties with the usual tax deductions and adding to their superannuation pretax in employer schemes, even contributing to charities pretax and still gaining child support because of these deductions which also allow them to hide their true income on which tax should be paid. Also take a look at how many of these so called struggling families are taking their children out of school to take advantage of holidays overseas. The average family should not be paid welfare benefits to raise their own children they should be doing what parents have always done in the past, accept responsibility and pay their own way for the children they bring into this world.That doesn’t mean they deserve absolutely nothing but it is now disproportionate.

  2. They said they wouldn’t increase the gst, all states have to agree to increase it!

    5 REPLY
    • Well we haven’t had cuts to pensions, still received our modest increases twice yearly. It might be the case that tying pension increases to perentage of men’s average wage will be worse if wage increases become minimal and the alternative cost of living increase twice yearly may be marginally better, who knows.

    • don’t think so Irene.. it will cost pensioners $80 per week over a 10 year period..and the reason there is no cuts to the CPI is because the Senate have blocked it.. not because The Liberals are nice people..they are NOT

    • Nobody suggested tying pension increases to a percentage of men’s average wage, Irene Hough. The Government wants to move to indexation by CPI only, instead of a balanced system considering wage increases, CPI and the Pensioner and Beneficiary Cost of Living Index. It WILL make pensioners worse off, because the CPI includes luxury items that pensioners don’t buy. The reason there is a Pensioners’ Cost of Living Index is because the CPI is irrelevant to low income earners. Please get your facts straight, Irene, because misinformed voters can do a great deal of harm.

  3. It had a terrible impact in England, still Aussie polli’s felt impelled to follow like lemmings.

  4. That’s all we need. 15% GST tax on our ever rising energy bills. 15% on our phone bills. 15% on part of our car registration. 15% GST on our house insurance, vehicle insurance, health insurance. 15% GST on our already taxed to the eyeballs fuel. No. Baby Boomers copped it up the R’s In the boom time because the Reserve Bank kept the interest rate very very high (supposedly to counter inflation) and we were the ones having to pay that on our houses. Now in the bust times, the Reserve Bank is keeping the interest very very low (supposedly to counter deflation) on the Baby Boomers savings. How much can a Baby Boomer Bear?

    5 REPLY
  5. why on earth would a normal citizen want a tax increase? it only benifits politcians and governments who squander most of it on running the bureaucracy and lining their own pockets

  6. If it happens it will be thanks to these unreasonable members of the senate who block everything on the principle that they have their moments of glory and power. Some got in with 1500 votes Australia wide. I still wonder how.

    3 REPLY
    • Well it’s not the senates fault at all. If them blocking things is so bad for the country, Abbott could fix it all tomorrow. Call a double dissolution, go back to the polls and try to get a majority government instead of the minority he now has. In fact if the senate are causing these problems he has a duty to do that.

      However he won’t do that because he cares more about keeping power and control than he does about the country.

    • the ALP and The Greens got more than 1500 votes and they doing ..all of them..what their electorates are asking them to do..

  7. They have not reduced Pensions Leanne, infact they have gone up & as far as ABC & SBS goes I wish they would stop funding them totally. Their biased reporting is a disgrace. Why should Tax Payers pay for them?

    5 REPLY
    • The pension rise has nothing to do with the Libs, they are going to reduce the rise in the future. Libs have taken concession payments from us.

    • The ABC has the only shows and news worth watching. What about the $880 million refund to Murdoch ? The subsidies, levies and tax avoidance from big business.

    • Cathy Garvie is right it is a shame your so ill informed Myra Byford.. make you wonder how you made it to 60plus years of age

    • Myra. The pension is still rising every 6 months, yes! This finishes in 2017, when the pension payments put in place by the Labor government finish. Then the LNP government payments will be under a lower system, which will mean the amount we receive (each 6 months) will be lower. It’s been estimated, that in 10 years time, our pension will be worth $80 a week, that’s $160 a FORTNIGHT less, than now. So Abbotts claim, that the pension will not change, is another LIE. But perhaps by then, (a lot of us) will have moved over to that other place in the sky?, & won’t need to worry about it.

    • Just clarifying you will get less of an increase as increases are currently based on AWOTE. Gov intends to increase only based on CPI in future saving them money so they can continue to pay increased number of people expected to be on pension later

  8. So then will small business actually pay the workers properly so that the workers can afford more expensive goods or will they just continue to underpay them?

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