From: yar@cs.su.oz.au (Ray Loyzaga)
Subject: Re: GST - Bloody Stupid
Reply-To: yar@cluster.cs.su.oz (Ray Loyzaga)
Organization: Basser Dept of Computer Science, University of Sydney, Australia
Date: Tue, 29 Sep 1992 23:40:35 GMT

In article <chris.717723968@suite.sw.oz.au> chris@suite.sw.oz.au (Chris Maltby) writes:
>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.

Having the mythical playing field does not preclude a government from
providing a stimulus to an area that they consider important, in
this case it is education, do you not consider education worthy
of such treatment? Would you prefer that HECS had a GST levied?
Or are you only against the private schools getting this treatment?
This would of course not help improve the level of education provided
by the public school system ... oh god, I am getting a head ache,
I think i need a pupil free day ...

>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.

I don't think you are serious, exemptions are valid if they are able
to be implemented in a way that does not cause a breakdown of the underlying
system, and which provides a positive stimulus to an area that is
valued by the country/government. Education certainly fits the bill
on this ground for me, the current sales tax exemption for Uni's is
another way of providing some stimulus.

>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.

Which constituency? The ones that are persuing an education??? I can see
why that is a threat to Labor. Oh, I am sorry, they have after all
provided (what was it?) 11 or 13 new universities in the last 8 years
which is certainly the biggest growth in Australia's history (according to
Keating). Of course they don't mention that all they did was order
a few new signs for the front gates of 10 or 12 colleges of advanced
education and institutes of technology. 

>>>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?
But I was talking about EDUCATION, where currently there is no
sales tax and there will be no GST, so GST isn't fixing anything here ...
it was you who attempted to show that making an exception of education
(as it is now) is politically incorrect due to some "level playing field"
dogma that either you have, or are somehow trying to transplant onto
the opposition. The playing field is basically level,
the government decides on where the "bumps" are, in the case of Education
the filed is level, it is just a different field to that of most
other goods/services. You of course prefer one field for the sacrosanct
public education where mediocrity is the catchcry, and another field
altogether for those rich toffs who go to private schools.

>>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

Aspects of the policies of the Labor Governments policies could
be described as those of "economic rationalists" but by no means
have they gone all the way with it, this may be a good or bad thing
I haven't made up my mind on that, but please don't try the same
tactic as the government saying "look we tried that economic
rationalist stuff and we screwed up, the opposition are full of
economic rationalists, they'll screw up even worse"

>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?

Hmmm, name a government State/Federal which has saved its tax revenue????
More taxes would be unlikely to foster a new type of political ethic
that saves the money it receives, rather it will try some hairbrained
schemes that make people believe they are getting some services for free.
If you want to increase the level of domestic savings it is easy,
make the first $2000 of interest earning tax free, shit that sounds like
Fightback .... If you want to reduce living standards it is simple
legislate for a Superannuation Guarantee Levy and trumpet it to
all employees, then in concert with the ACTU allow the employers to
use this levy as an offset to cost of living increases, bingo
real incomes fall by the size of the SGL. Of course the ACTU doesn't
mind since they don't really care about the workers (unless they
can be caught out) and just want to be in control of the 10's of
billions of dollars that will be raised by the SGL. What guarantees
are there for the workers with these funds .... yup the big ZERO.

The GST makes no attempt to reduce the standard of living of the population,
the compensation packages address only the needs of the poor.
It redirects the taxation to consumption, so if you choose to go without
(which used to be the way people saved, before the current expectation
of government handouts came into vogue), it will be far easier to
accumulate capital for larger purchases.

>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.

It is, if you consume more you pay more.

>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?

RA2 degenerates to RA1 doesn't it??? If you make the tax progressive,
the rich will be taxed more, therefore loss of incentive and by your
analysis, recession.