From: chris@suite.sw.oz.au (Chris Maltby)
Subject: Re: GST - Bloody Stupid
Organization: Softway Pty Ltd
Date: 28 Sep 92 23:46:08 GMT

In <1992Sep28.062504.15816@cs.su.oz.au> yar@cs.su.oz.au (Ray Loyzaga) writes:

>In article <chris.717651403@suite.sw.oz.au> chris@suite.sw.oz.au (Chris Maltby) writes:
>>Now consider private schools. The school fees paid by the struggling
>>battlers who send their tykes to these slave camps will be zero-rated.
>>It seems that luxury services like these are not like other services
>>provided to the public. I guess there is a very good reason why you
>
>All education is 0 rated, including the "free" education that Uni's provide.
>This is exactly as it is now.

Exactly - but the idea of the GST (or so it is claimed) is to level
the infamous playing field and tax everything evenly. This will allow
unobstructed market forces to deliver the best possible services at the
best possible price with the maximum long term benefit for national GDP.

So, having exemptions is like being a little bit pregnant. Once you exempt
something (for whatever reason) you have to abandon the idea of the
universal level playing field and start talking about certain economic
activities as being more important or less important than others. Anything
else has to be seen as mischievious or foolish.

It just turns out that a 15% tax on school costs would impact a particular
constituency a lot harder than others - so political expediency comes
along and out goes ideology. Mind you, I'm not saying this is a wholly
bad thing - it is a version of accountability - but they can't have it
both ways.

>>can still call the GST "fair and equitable" in spite of this wee
>>anomaly. (Over to you David?)
>
>Seems that if the GST zero rating for education and medical services is
>not fair and equitable by your definition, and since it is exactly
>as it is now (minus the savings from reduction in indirect taxes under
>Fightback that these organisations will have), then the current situation
>is not fair and equitable???

But Ray, if things are ok now, why do we need a GST to fix them?

>>My point (as usual :-) in all this is to point out that it's wise to
>>avoid all the religious posturing and snake-oil claims about any
>>policy; GST, free-trade, whatever, and consider the outcomes a little
>
>to that I would add "welfare state, wealth redistribution, free anything"

Certainly.

>>more closely. After all, there are other ways to redistribute the wealth
>>of our nation...
>
>Or maybe you should answer the real question, "what is the aim of
>wealth distribution, what are the hoped for benefits, is it self
>sustaining?"
>
>Maybe after you have answered this question, gotten general agreement
>that your answer is right, you might want to try for changes which
>might be needed for "wealth redistribution", of course this seems too
>much like hard work, and it doesn't sound as feel good and lefty
>as screams of "wealth redistribution" do now, but maybe it might be
>more helpful.....

I never said this was an easy question to answer. I would like everyone
to the usual pat answers to these hard questions. I would also like
there to be more discussion of economics as religion. We (as a society)
have founded the last 10 years or more (yes I know that means Labor)
of economic policy on a "rationalist" philosophy. So where is the
evidence that this is better than any other policy base?

Now when we mix in political religion, such as distribution of wealth,
public need vs. private greed, etc etc, it's not likely we'll reach
any form of agreement in a hurry. So lets try and leave out the religion
(except when religion is the only justification for something) and
concentrate on the effects of the proposed policies. I don't pretend to
believe that one solution is inherently better than another - or that
the best solution is also the most socially palatable.

On a different note, there is a school of economic thought which believes
that Australia must concentrate on its trade problems and foreign debt
ahead of all other things. The proposed approach is to increase taxation
as a way of increasing domestic saving and cutting consumption ( ==
a reduction in "living standards"). (Perhaps a GST would be a good way to
do this.) So - should the burden of this new taxation fall more heavily on
the rich or the poor?

Religious Approach 1: Everyone knows that if you tax the rich they lose
incentive and you get a recession. That means we'll have to tax the poor.

Religious Approach 2: The richer you are the more you can afford to pay,
and the more you are likely to consume. Make the new tax progressive.

Practical Approach: New taxes are political suicide. If we must do it, wait
until after the election when you have 3 years to face the voters again, and
when they've most likely forgotten who did it.

Which of these approaches is better?
-- 
Chris Maltby - Softway Pty Ltd		Internet: chris@softway.sw.oz.au

PHONE:	+61-2-698-2322	"I'm waiting for X-Windows to become just that;
FAX:	+61-2-699-9174	 Ex-Windows" - A McGrath.