More promises broken, and we are once again being directed away from the real issues

It seems whenever a new issue comes up that he doesn’t want anyone paying attention to, there is a new big song and dance in the media about a littler issue so we may forget the real issues.

GST is another broken promise.

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Why is Abbott considering a GST hike?

Posted Tue at 7:00amTue 28 Oct 2014, 7:00am

Tony Abbott’s recent consideration of GST hikes is more about covering his costly policy priorities than plugging a revenue hole in the budget over the next decade, writes Stephen Koukoulas.

It is not altogether clear why Prime Minister Tony Abbott is giving consideration to hiking the rate of the goods and services tax.

This is especially the case when the budget his Government brought down in May confirmed that government revenue would be rising to a healthy 24.9 per cent of GDP in 2017-18, to be well above the historical average and some 2 to 3 per cent of GDP higher than the revenue take under the previous Labor government.

Increasing the rate of the GST is, at face value, a simple and very effective way to boost government revenue. Based on 2014-15 data, each 1 per cent extra on the GST would raise about $5.4 billion (increasing to $6.4 billion in 2017-18), meaning a hike in the GST rate from the current 10 per cent to, say, 15 per cent would add more than $25 billion per year to government revenue, escalating to more than $30 billion per annum within three years – if nothing else changed.

Hiking tax rates, including for the GST, raises the question, “What is the money being used for?”

One very popular misconception in todays politics is that the Abbott Government is about shrinking the size of government. Overlooked in the discussion of fiscal policy under Mr Abbott are the big spending government programs, including the paid parental leave scheme, roads and other infrastructure expenditure, defence and the staggering $8.8 billion cash grant to the Reserve Bank of Australia.

The revenue base and the desire to hike the GST would not enter into the current political debate if these spending measures either didn’t exist or were smaller in scale.

The facts show that Treasurer Hockey’s budget in May delivered government payments, as a share of GDP, at 25.3 per cent in 2014-15 and it will remain at or above 24.7 per cent throughout the forward estimates. By way of contrast, the last three Labor budgets had government payments to GDP averaging 24.6 per cent.

If Mr Abbott and Treasurer Hockey were in fact fiscally tight and their budget cut government payments to, say, 24.1 per cent of GDP, the level delivered in the last full year of the Labor government in 2012-13, the current tax take without hiking the GST would see the budget deficit of 0.1 per cent of GDP in 2015-16 and a surplus in 2016-17 and beyond, even with the expensive spending plans of Mr Abbott.

While there is no doubt the revenue base is problematic in the current global climate of low inflation, Mr Abbott’s consideration of GST hikes is more about covering the high spending associated with his policy priorities than plugging a revenue hole in the budget over the next decade.

The beauty of the GST is that it is a transparent tax that is well understood and widely accepted by both business and consumers. The downside of the GST is that it is regressive, meaning that those on lower incomes are hit with a larger proportionate share of tax on a given basket of goods and services than is a rich person buying the same basket of items.

This is where much more detail of Mr Abbott’s notion of hiking the GST would need to be considered. What other changes will accompany the tax increase?

Where would the money go? To have any appeal electorally, pensions and other social security payments would need to rise, making no welfare recipient worse off when confronted with grocery and utility bills boosted by the higher rate for the GST. There may be a case for adjusting income taxes lower as the GST increase took effect. But the problem with giving too much of the money back to pensioners and income earners is that overall impact on the budget bottom line and moving to and locking on budget surpluses is undermined if the money is merely recycled through the economy.

Any review of Australia’s tax system must include the GST – its level and coverage. This in turn needs to feed into the shape of the budget and issues of fairness and equity. At a time when the Coalition Government is increasing spending at a hefty pace and cannot get the budget to surplus, reverting to tax hikes has an unpleasant whiff of big government about it.

Before any increase in the GST is contemplated, a lot more information needs to emerge on why the extra revenue is needed and perhaps a tighter reign on government spending would deliver a budget surplus without the tax take jumping to new highs.

http://www.abc.net.au/news/2014-10-28/koukoulas-why-is-abbott-considering-a-gst-hike/5845256

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The fuel hike will cost people at the pump, and then for everything we buy that has had to travel to get to us. it is more than the little $0.40 a tank, as Abbott is claiming it will be.

Then there is Petrol prices that will rise next month after the federal government announced plans to increase the tax on fuel despite not having parliamentary approval for the measure.
The government is daring Labor and the Greens to continue blocking the fuel tax rise, warning that the taxes paid by motorists would be refunded to the big oil companies and not the motorists.

Labor, the Greens and the Palmer United Party are opposed to increasing the tax on petrol and the government has not attempted to introduce the measure into the Senate because it would be defeated.

Is Tony Abbott a moron or does he think the Australian public are going to swallow this bullshit? M.A.

Read more: http://www.smh.com.au/federal-politics/political-news/petrol-prices-to-go-up-as-government-increases-fuel-excise-despite-rise-being-blocked-by-parliament-20141028-11cumj.html#ixzz3HH1YyqYJ

Petrol prices will rise next month after the federal government announced plans to increase the tax on fuel despite not having parliamentary approval for the measure.

And the government is daring Labor and the Greens to continue blocking the rise, warning that the taxes paid by motorists would be refunded to the big oil companies and not the motorists. Which it will anyway and is half the reason!

Finance Minister Mathias Cormann announced the move to reporters in Canberra on Tuesday. 

Finance Minister Mathias Cormann announced on Tuesday that the fuel excise would be raised from November 10. A majority in the Senate oppose an increase in fuel excise.

He said the government would increase the tax through a “tariff proposal” which allows the government to raise taxes before they are legislated.

Senator Cormann said the tactic was used by the former Labor government in 2008 when it announced a higher tax on “alcopops”.

“Tony Abbott has launched a sneak attack on the wallets and cost of living of every Australian”: Bill Shorten. Photo: Alex Ellinghausen

He said the effect on petrol prices would be “modest”.

“But the impact on our capacity to build a stronger more prosperous economy will be significant,” the Minister told reporters in Canberra

“Your typical household, using about 50 litres of fuel a week, will only pay about 40 cents a week more for their fuel,” he said.

“They need to find a way to guarantee motorists that they’ll get their money back”: Andrew McKellar. Photo: Supplied

It is expected to raise the government $2.2 billion over four years. From 10 November, the rate of fuel duty will increase from 38.143 cents per litre to 38.6 cents per litre.

Labor, the Greens and the Palmer United Party are opposed to increasing the tax on petrol and the government has not attempted to introduce the measure into the Senate because it would be defeated.

Opposition Leader Bill Shorten said the move was an “outrageous” attempt to bypass the Parliament.

“Tony Abbott yesterday says he wants a mature debate and yet today, he ambushes Australian motorists, ambushes the Parliament of Australia and through the back door has launched a sneak attack on the wallets and cost of living of every Australian.”

The tariff proposals will be tabled in the House of Representatives this week. Parliament will be given 12 months to validate the increased fuel tax.

Senator Cormann said he was confident of Parliament passing the bills within a year and warned that if it failed, the revenue would be returned to the oil giants and not motorists.

“It will go back to fuel manufactures and to fuel importers who would essentially have a windfall gain at that time,” he said. “There’s no obligation on those fuel importers or fuel manufacturers to remit that money to users.”

Andrew McKellar from the Australian Automobile Association said the government’s tactics were “completely unacceptable”.

“It’ll be motorists that are paying the tax and if they cannot pass their legislation then that money has to go back to motorists, so they need to find a way to guarantee motorists that they’ll get their money back,” he said.

The government broke its pre-election promise not to introduce new taxes in the May budget, when it unveiled plans to increase taxes on the rich and the fuel excise.

The fuel excise increase was due to come into effect on 1 August this year.  The three-month delay will cost the government $35 million in lost revenue.

In May, the government forecast the measure would raise $2.2 billion over four years and $19 billion over the next decade.

Government senator Ian Macdonald told Fairfax Media he remained “totally opposed” to raising the petrol tax because it would unfairly impact most upon his rural and regional constituents who don’t live in capital cities and have access to public transport.

He said he would still vote against the tax increase when it is put to Parliament in 12 months time.

“I recognise that it is a clever way of bringing in something that I would have voted against and I understand the majority of the Senate would have voted against.”

Read more: http://www.smh.com.au/federal-politics/political-news/petrol-prices-to-go-up-as-government-increases-fuel-excise-despite-rise-being-blocked-by-parliament-20141028-11cumj.html#ixzz3Hd2Hbdar

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