Austrailian GST Essay Research Paper The GST

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Austrailian GST Essay, Research Paper The GST (Goods and Services Tax) proposed by the Howard government is a new tax which plans to add ten percent to the cost of every item purchased whether it be a car or a pen with only a few exceptions. The tax set to commence on July 1 2000 may still not become a reality if the senate does not have a majority vote on the issue. The VAT (Value Added Tax) of the United Kingdom is much the same tax adding seventeen and a half percent to all goods and services (although there are exceptions). This tax is currently in operation in the UK. Differences between the proposed GST and VAT are not great but there are some significant differences. If and when the GST becomes a reality a range of taxes including wholesale sales tax and provisional

tax will disappear when the GST appears. Daily consumables and services will rise as a result of the GST. The government is promising to balance the tax by creating household savings through lower marginal tax rates. The question is, will this be sufficient compensation? It probably will not be. The ^Aussie battler^ will not be favoured with the GST, as the current compensation being offered is simply not sufficient. This tax proposal is yet to be passed by the Senate which means that the GST may not even become a reality. There may have to be some changes to the GST for it to be passed by the Senate without another federal election. Some of these may be food to be exempt from the GST, more compensation for lower income families, pensioners, etc. Although the government will

receive ten percent of every item sold, not many items will actually rise by the full ten percent; estim! ated rises for goods and services will often be significantly lower than ten percent. For example, food is predicted to only rise four percent. Clothing and footwear will rise six point eight percent but electrical goods will fall by twenty two percent because of the current thirty two percent tax which will be replaced by the ten percent GST. Health and education will be supposedly GST free, but schoolbooks and uniforms will still attract the regular GST of ten percent. Childcare will not be taxed, financial services will be. Renting will not attract a GST but prices are expected to rise, as landlords will have to pay extra for repairs and maintenance of properties. The sale

of existing homes will not have a GST placed on them but new homes are expected to rise by four point seven percent. Council and water rates will be GST-exempt. Cars will have the GST but cars worth more than sixty thousand dollars will have a twenty five percent luxury tax. Vehicle registration will be f! ree and public transport will have a part GST on it which will be less than the standard ten percent. If the GST becomes a reality it will certainly have a big impact on society, whether it be for the better or for the worse. The VAT is an important method of raising revenue for the government in the UK. It is an indirect tax as it taxes expenditure. It is possible to see the effect on both macro-economic variables and individual families. Although it will be different to

Australia^s proposed GST it may give us an idea of the impact of the GST if it is passed by the Senate or in future elections. The VAT also has exemptions. There is no VAT on most food, newspapers and children^s clothes. Fuel (electricity etc.) also used to be exempt from the VAT but a few years ago the conservative government took this away. There was an uproar in the House of Commons for these services to be increased to seventeen and a half percent so it was limited to eight percent, but every other good or service is charged at seventeen and a half percent VAT. The tax is not paid directly by the consumers, the firm pays VAT on all the goods and materials they buy and they also charge VAT on all the goods they sell so the costs are passed onto the consumer. In this way the