From: cwarren@peg.pegasus.oz.au
Newsgroups: aus.politics
Subject: GST - Bloody Stupid
Date: 13 Sep 92 03:40:00 GMT
Nf-ID: #N:peg:996200269:000:7206
Nf-From: peg.pegasus.oz.au!cwarren    Sep 12 22:40:00 1992


           
           Liberal GST, a generally stupid tax, is showing signs of
            cracking up.  Charities, Unions, and now even capitalists
            are fearful of its ramifications should it be
            implemented.
            
            Charities like the Brotherhood of St Laurence, who
            provide free services for the needy, will find they will
            have to do all their puchasing at a 15% GST penalty rate.
            Their phone bill will rise 15%, their electricity will
            rise 15%, office consumables - up 15%.  In fact as they
            don't sell any product, Liberal GST will have the effect
            of smothering their charitable activity.
            
            All non-profit organisations are threatened.  Community
            sports groups, and service clubs (tennis clubs, kennel
            clubs, Lions clubs, Boy Scouts, Girl Guides) will find,
            to the extent they do not charge a commercial fee, all
            expenses will rise up to a maximum of 15%.
            
            Voluntary bush-fire brigades, local search and rescue
            clubs, community senior citizen groups, CWA, church
            action groups, and country hospital auxilliaries, will
            all find themselves having 15% of their revenue swiped by
            the Australian Tax Office.  Even parents purchasing goods
            as part of P&C activity to improve education at their
            children's school will find that Hewson chops 15% off
            them as well.  Zero-rating for GST does not mean that
            purchases necessary for a zero-rated product are
            themselves GST-free.
            
            Hewson pleads that the effect will not be the full 15%
            because other taxes will be cut.  Unfortunately most of
            taxes to be cut, are State taxes and guess what???  Yes,
            Hewson is going to GST State and Local Government
            expenditures, (if not their sales) so they are very
            unlikely to cut other taxes such as payroll and State
            sales tax.  As demands for these levels of governments to
            balance their budgets increase, so will their post-GST
            taxes.
            
            There is little doubt that society under GST will be
            radically traumatised.  Much of current community
            activity and recreation occurs through non-profit
            activity; golf clubs, local libraries, little athletics
            etc.  There may be scope for some of these to increase
            financial contributions from participants but nothing
            like the amount needed to offset GST.  But Hewson is not
            thinking "society" he is thinking "profits".
            
            The recessed property industry will be in a particularly
            difficult predicament after GST.  Property capitalists
            have been astounded that Hewson wants to exempt all
            building construction from GST.  The employment effects
            of this can only be described as an "unemployment bomb".
            





           Under GST, business normally feeds a 15% surcharge of its
           value-added (which it has received through a selling
            price-hike) to the Tax Office, but seeks credit for GST
            paid on its earlier inputs. Its nett position is no-tax
            paid although part of its cash-flow will be held up in
            Tax Office coffers until the paperwork is sorted out.
            
            In order to get this credit a business will have to
            register with the Tax office and put in frequent returns.
            
            Only GST liable and "zero rated" entities are entitled to
            seek this tax credit.  If you are GST exempt, you are
            well and truely stuffed.
            
            Being GST exempt means YOU have to pay GST on everything
            YOU buy but you get no credit for this.
            
            The Hewson circus is unwilling to GST residential
            construction and residential renting.  This is an
            admission by the Libs that supposed offsets for GST are
            known to be insufficient in practice.  If all new houses
            went up 15% and rents also, people would quickly turn
            against Hewson.  As it is, only some costs for
            residential property (eg repairs and agents fees) are GST
            trapped.  Similarly, financial services are GST exempt.
            You can imagine the uproar if mortgage services went up
            15%.
            
            Unfortunately providers of financial services, (Banks
            etc) and property developers constitute a major component
            of domestic capitalism.  For basically ideological
            reasons, Hewson has fundamentally upset their business
            prospects.  Their costs will rise and they will most
            likely respond by cutting jobs, or by raising selling
            prices the full 15% which they inherit from their
            suppliers, not just the 15% on their particular value-
            added.
            
            For zero rated entities, it is still not clear how a
            supplier of say furniture or stationary, for a zero-rated
            purpose, will be able to recoup the GST they had paid
            earlier.  They normally (in effect) get it from the
            following customer.  Any earlier supplier is alright, he
            is smilimg because he sold to you and you are not zero-
            rated.
            
            A better alternative to GST is to reform the tax system
            so that tax falls according to the ability to pay.  This
            can be done by income and sales taxes not by a blunt and
            troublesome universal levy like the GST.
            
            In Canada, small business found the GST a monumental
            disaster.  The Canadian Federation of Small Business has
            condemned the Canadian GST.  Where ever a GST/VAT has
            been introduced it has been increased (now 17% in UK).
            
            The GST will mainly benefit exporters.  It will damage
            domestic capitalists, workers, society, and economy.  It





            has traumatised Canada, the UK and NZ.  Why should we let
            the economic ideologues stuff up our country as well????
            
            For Hewson, as for every Liberal that has ever emerged
            from under the rock, profits come before people, fighting
            inflation comes before fighting unemployment, a free
            market is more important than a fair market and if there
            is more profit overseas, then "bugger Australia".
            
            With zero tariffs, and a burdensome GST, Australia in the
            year 2000 will be a riot-strewn economic wasteland all
            for the sake of perverted economic rationalism that puts
            money interests before the rights of humanity.
            
            
            CHRIS WARREN
            
            12 September 1992
    
Newsgroups: aus.politics