Phil Hanratty Economics, Commerce and Industrial Relations Group Taxation reform is back on the political agenda of many sections of the community. Discussion of measures to bolster household saving are also receiving increased attention.
Personal saving is tax-exempt.
One significant advantage of a DET over a WST or a GST is that it can be levied progressively so that average taxation rates increase with the level of a person's consumption spending. This is possible because a DET taxes aggregate personal consumption spending together in one bundle, whereas the others tax each item of consumption spending individually. The first is an income-based form of a DET in which the starting point is roughly the definition of income currently in use by the taxation authorities. Personal saving made within any financial year is then subtracted from this income measure. Since consumption is, by definition, equal to income minus saving this gives a measure of personal consumption which is then subject to a progressive taxation schedule as in the current income tax.