From: fgh@hannibal.ee.mu.OZ.AU (Frank Hayward)
Subject: Re: implication of GST
Organization: Electrical and Electronic - University of Melbourne 
Date: Sat, 10 Oct 1992 08:37:15 GMT

In article <1992Oct9.212032.1@cc.curtin.edu.au> zrepachol@cc.curtin.edu.au (Paul Repacholi) writes:
>In article <1992Oct9.004604.25039@trl.oz.au>, jbm@hal.trl.OZ.AU (Jacques Guy) writes:
>...
>> are dumb enough. But let's *suppose* that the GST actually 
>> replaces sales tax. Your basket of groceries will contain stuff
>> where sales tax may vary from 0% for some foods to 30% for
>> some "luxury" items (apparently, wiping one's arse with toilet
>> paper is luxury. But sales tax is calculated on the wholesale
>> price, *before* the retailer has added his margin. So there
>> is no way of figuring out how much sales tax there is on
>> those groceries, short of asking the retailer what's his
>> margin on every single item. The latest I read, GST would
>> have to be applied at 15% or so make up for lost revenue
>> from sales tax (which would result in no overall price increases,
>> but would cause the prices of some items to rise, some others
>> to fall, and some to stay the same).
>
>Here is a hidden trap for the younger players...
>
>Let us, for argument say that our $100 is $75 of 0% ST, and $25 of 30% ST items.
>A resonable markup is ~100%, so we have at wholesale, $35 plus $11 plus $4 ST.
                        ^^^ more like 30-50%
>The larger chains quickly saw that they could put the $4 in their pocket by
>reducing the internal price from $11 to $1 ( plus 30c ST ) and increasing
>the price of the tax free goods from $35 to $45. When the Tax Office tryed to
>stop it, they quickly showed that it was 'standard' pricing for the industry,
>because, of course ALL of them where doing the same sort of thing.
>
>Now lets do it the GST way. The 'retail' end get $45 plus $11 of goods. Yes,
                                                  ^^^$35 
>I know these are not the figures quoted above, and this is just the point.
>They will not reduce the price of the currently tax free items, I'll bet, but
       a very cynical line indeed!!!!!!!
>WILL increase the price of the taxed items to show a profit at wholesale.
>If we apply the same margin, we will be paying $112 plus 15%, ~$130!!
                 ^^^^^^^^^^^totally unrealistic

You also seem to forget the other parts of the Fightback package:
	Lower income Tax
	Increased social security payment to more than cover inflation
	NO payroll tax, so locally made goods are 6% cheaper wholesale.
	Lower transport costs from lower fuel taxes

You cannot look at one part of the package in isolation.  It will be 
implemented as a package (not a few bits here & there).

>
>There is also the question of a scad of 'non-sales taxes'.
>
>Example: A photographer must pay a "proofing tax" on proof sheets or prints
>that are not intended for sale. Will this one go away under the GST?
  No unless it is for his/her own personal use, not for commercial use
  the GST will go on to the final prints, the cost of which will include
  the cost of proof sheets.  The GST STOPS double taxing!!

The GST will make tax simpler and fairer.
>
>~Paul
>
Frank


------------------------------------------------------------------------
Dept. of Electrical & Electronic Engineering  | E-mail
University of Melbourne                       | fgh@mullian.ee.mu.OZ.AU
Parkville, Victoria 3052, AUSTRALIA           | DoD# 0708 

------------------------------------------------------------------------
Dept. of Electrical & Electronic Engineering  | E-mail
University of Melbourne                       | fgh@mullian.ee.mu.OZ.AU
Parkville, Victoria 3052, AUSTRALIA           | DoD# 0708