Higher GST a low wattage idea

Independent MP Rob Oakshott stepped into the media spotlight yesterday saying both the Coalition and Labor want to raise the GST rate – after the election. Sadly, he is correct.

”It shouldn’t just be about the GST. This is about why on earth in Australia we have insurance taxes at all. Why do we still have stamp duty in Australia in 2012? It’s removing those inefficient state taxes that is the game. And if we’ve got to have a look at how we work some of these so-called efficient taxes harder to achieve that purpose, then that is an opportunity to engage the Australian community, not a threat pre-election,” Oakshott told Fairfax.

Quite right, Mr Oakshott.

Australia’s Future Tax System accepted a continuing role for GST, while noting it is ‘mildly regressive’. It falls more on the poor because almost all of their incomes go toward daily costs like food and utilities. Dr Henry prefers income taxes – which can be highly progressive but aren’t – and taxes on immovable bases like land and minerals.

Almost all the taxes we need to scrap ultimately fall on wages. They discourage activity. They trap citizens into blinkered lives.

Better to seize the moment and move government revenues to sources that hurt no one. They exist. Use them.