Letter to the Editor – AFR
31/08/2010
Gavin R. Putland, Melbourne
Instead of prosecuting small businesses for making mistakes with capital gains tax concessions (“Tax Office hits small business”, AFR, August 30), why not abolish the concessions and use the extra revenue to lighten the compliance burdens concerning personal income tax and goods and services tax?
As capital gains overwhelmingly represent economic rent, it is both efficient and equitable to tax them at a high rate. But requiring small businesses to work as unpaid collectors of income tax and GST is neither efficient nor equitable, and appears to contravene section 82 of the Constitution, according to which the “costs, charges, and expenses” incident to collection of tax are chargeable to consolidated revenue.
The total tax take from all sources apparently equates to around 4% of the gross national product. We also confront the destiny of demography that sees fewer and fewer taxpayers supporting a larger and larger group of retirees and other benefit recipients. A single expenditure tax of around 5% variable, would solve both problems; given it would place its impost directly on the GNP; rather than people per se. Moreover, the rate could be varied region by region to alone control inflation/stagnation, which would allow interest rates to descend to historically low rates, with all that that implies for sustained inflation free turbo charged economic growth.