From: yar@cs.su.oz.au (Ray Loyzaga)
Subject: Re: GST - double tax?
Reply-To: yar@cluster.cs.su.oz (Ray Loyzaga)
Organization: Basser Dept of Computer Science, University of Sydney, Australia
Distribution: aus
Date: Tue, 17 Nov 1992 06:26:17 GMT
Keywords: GST

In article <rakesh.721969299@sungear> rakesh@mame.mu.OZ.AU (Rakesh DESAI) writes:
>Something about GST which is not clear to me, can somebody explain?
>
>IF a particular item from raw material stage to final stage (when it
>reaches consumer) may pass through 3 - 4 stage of manufacturing level.
>If 15 % GST is charged on each level of sale, will that not increase
>price of the manufactured goods?
>
>e.g.  If a ballpen worth a dollar requires 4 stages of manufacture and
>each stage you charge 15 % tax, will not ballpen cost 
>1.15 * 1.15 * 1.15 * 1.15 = 1.75$?

Each stage of manufacture can claim that the previous stage has paid
a 15% GST, which means that they get a tax credit for the GST already
paid upstream. So as it goes downstream it becomes a 15% tax on the
value added. This is why the GST works as a 15% tarriff, as importers
cannot claim that GST has been paid, so they have to pay it on their
entire sale price. This means that a distributer (like woolies etc)
that can buy an Aussie product for $1.15 or an overseas product for
$1.15 will find that the Aussie product is cheaper because he will
get a 15 cent tax credit. This calculation is somewhat harder than
the average 8 year old can do, so you can see why it doesn't make it
into the media.

>Can someone comment on above?  Sounds ridiculously high taxation.  Or
>GST has any means to over come double or tripple taxing?
>
>Other question GST will be charged on end product by business,
>retailer, or entrepreneur to the client.  Hence a business-person will
>be tax collector.  Isn't Dr. Hewson assuming that all business-people
>are honest and the collected tax will be passed on to
>govt?  My personal experience is that, in India (from where I have
>migrated) Sales Tax (similar to GST) of 4 to 12% is charged on
>commodities (depending on the category).  This is there in Indian system

The Australian system is vastly different to the Indian system, for
tax purposes receipts must be retained, most businesses are honest
within some bounds. You will find that most of the scams are done
by the larger firms, but yes it is possible that some businesses may not
be declaring any turnover (they better not issue traceable receipts!),
but unlike the present, at least some tax will be collected upstream
and downstream from them.

>for past 40 years (Dr. Hewson made it sound GST as brand new idea).

Hmmm, last I heard he was using many other countries as an example and
pointing out that we are one of a few OECD countries without a
GST. Sounds like you should buy a different newspaper, the only thing
that sets the Hewson proposals from the rest (and I would probably
think for longer than 40 years) is that he has issued a fairly
comprehensive list of changes across a range of policy areas
that he is willing to take to the people, PRIOR to the election.
This is very different to most oppositions (many could argue
that it is foolish too!) and I for one would like this sort of
behaviour to be the norm, rather than the exception. Sadly with
the way the parliamentary system works against the opposition
and the fact that a complex system of reform is impossible to
sell through the media due to their need for sensation grabbing
headlines I don't think that the FIghtback package stands a hope in
hell of being implemented.

>This tax is collected by business-person and supposed to be transfered
>to govt.  Since business-person are the most corrupt part of system (at
>least in India) they manipulate figures and not only evade regular tax
>on income but also eat away collected sales tax.
>
>Did Dr. Hewson look at such possible problem?
>
>rakesh
>
>ps I am liberal supporter but Kennet and Hewson are making me really
>think whether they are worth getting elected!
>--
>************************************************************************
>*   Rakesh Desai, Mech & Manf Eng, Uni of Melbourne, Parkville,Vic 3052*
>*   email : rakesh@ecr.mu.oz.au   * (03) 344 6728                      *
>************************************************************************

What exactly have Kennett/Hewson said/done that you disagree with?
Newsgroups: aus.politics