Letters to the Editor
As published in the AFR
April 7th
It is absurd to say switching from income tax to GST improves work incentives.
Consumption equals income minus savings. A 20% GST is much the same as a 20% flat rate income tax with no tax-free threshold but with unlimited superannuation deductions.
But it’s a worse than that. It is a wage tax more than an income tax. Capital owners get GST refunds (equivalent to a 100% deduction for replacing plant and equipment). Workers and families get no GST refunds for replacing and investing in the future labour force. Worse still, GST does not tax income spent outside Australia by foreign buyers of Australian land and resources.
Treasury says Australia has a demographic fiscal problem. But only a seriously stupid country would punish its workers, especially for breeding and investing in the future workforce, while exempting foreign landholders. I doubt Australians are that stupid.
So here’s a counter proposal for Treasury. Can we please sack our Treasury and outsource the job to the Brunei Treasury? The Brunei company tax rate is 20% and there is no personal income tax or GST – all because they collect a decent bit of their land income as public revenue.
Dr Terry Dwyer
Canberra ACT
