Thursday, September 15, 2011

Our GST. Expensive, clunky, too low

The goods and services tax is expensive to collect, leaks revenue and is tying up the courts.

In what he calls a “judicial” review of the tax federal court judge Richard Edmonds has told a conference in Melbourne that after eleven years it has “failed to meet the generally accepted hallmarks of tax reform” and has in many ways made things worse.

“If only for that reason it should be on the agenda of the tax forum proposed for next month,” he told the national division of the Tax Institute.

His call for a review of the GST came as independent MP Tony Windsor said the summit should consider increasing the GST from 10 to 11 per cent.

Justice Edmonds said it cost the Tax Office $1.36 to collect each $100 of GST revenue, well above the average of 94 cents for other revenue.

The High Court had before it obscure questions such as whether Italian mini ciabatta was a cracker or a bread.

“If it is a cracker, then it is subject to GST; if it is bread, it is GST-free"... he said. The federal court has had to adjudicate on whether cancelled Qantas tickets constitute a service and theHigh Court has had to consider whether a deposit paid to a carpet retailer was a service.

Referring to claims by the former Treasurer that the GST would make the system simpler Justice Edmonds said “the fact that such an issue could finish up being agitated in the High Court makes a mockery of Mr Costello’s prophecy.”

Mr Windsor said a one percentage point increase in the GST could eliminate a range of nuisance taxes.

"I think that the simplicity of that argument is telling, you can eradicate some of these things we don't want,” he said.

Henry Review member Greg Smith told a conference in Canberra the GST was expensive to collect at the 10 per cent rate but would have a lower average cost if the rate was lifted.

Published in today's SMH and Age

Justice Edmonds

Related Posts

. We need more GST - Greg Smith

. It's the tax summit you have when...

. Henry's not dead, not resting