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Transactions tax

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Posted 06 August 2013 - 07:40 AM

In today's Fairfax outlets Ken Henry points out that whatever flavour of government we have, we cannot sustain our lifestyles on our current income. In short, we have to raise taxes or cut services.

One idea he floated was rescinding the GST and applying a transaction tax instead.


Dr Henry also suggested revising the GST by adding a new consumption tax.

The existing GST was inadequate, he said, adding: ''We are experts at policy compromise in Australia. ''When the GST got into Parliament it imposed limits on it, especially in relation to food, and that guarantees GST revenue grows more slowly than GDP, by design. It's truly perverse,'' and needed to be strengthened, he said.

''A cash transactions tax is a GST by another name. Why not levy it at 15 per cent and abolish the GST'' levied at 10 per cent?

The approach to cutting spending in pursuit of a budget surplus was a positive discipline, but ''it would be a tragedy if that discipline were to become a straitjacket''.

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