Increase GST Australia: A good GST and tax system is very important for a country’s prosperity and economy. A stable tax system is required in order to raise revenues that aid government activities without having to burden the country’s economy.
The Australian Tax Office (ATO) collects all these taxes, and that money is used to fund healthcare, the military, education, and other necessities. GST is an indirect tax that is paid by customers, and it is already included in the prices and costs of services.
The current GST rate in Australia is 10%. The GST was implemented in Australia on 1 July, 2000 by the Howard government.
Ever since it came into being, it was subjected to a heated claim that it’s unfair for the low income ones. The government has finally decided to take notice of this issue and here’s all you need to know about it.
Increase GST Australia
Why was GST Introduced in Australia?
GST was introduced in Australia to take over the existing federal wholesales sales tax system. It eliminated all other categories of taxes such as numerous state and territory taxes, levies and duties such as stamp duty and banking taxes.
Moreover, GST is a very important element of Australia’s financial system. It’s one of the main reasons why Australia is managed so well. It helps the Australian government in funding various benefits for the citizens such as good infrastructure, police protection and much more.
Increasing GST in Australia: Talk of the Town
The Australian government depends on income tax of individuals and corporations for most of their activities. Their reliance on income tax is still the same as it was back in the 1950s, despite all the economic growth and prosperity.
There’s been lots of talk about reforming Australia’s GST policies. This reform can give Australia an economic boost of between $14 billion to $40 billion.
There are four different scenarios considering this reform which are as follow:
- Increasing the GST rate to 12.5%, the base remains the same.
- Expanding the GST base and removing GST-exempt conditions from five major categories such as health, education, children, water and sewage and food.
- Increasing the GST rate to 12.5% and broadening the GST base.
- Expand the base and make the current exemption items at 5% and increase the rate on the current base to 12.5%.
What Removing Exemptions Could Cause?
Removing exemptions from education and health is just like digging their own grave for Australia’s government. Government would be taxing itself for it majorly. This leaves with the only option of taxing food. Free market economists highly support the idea of taxing food. Other than them, no one else is in favour of doing so.
Anyhow taxing food is a bad idea since it majorly targets the low income ones. It would become a burden on everyone and would increase the cost of living, which is just not what the Australian government wants.
The high dependance on income tax goes against all neoliberalism beliefs.
Now the Australian government will have to choose between these following schemes to fund for their future government activities. But increasing the GST, for good or bad, is not an option for now.
Superannuation Tax Australia
Superannuation is the money that you pay or your employer pays on your behalf from your working income to use for after you retire. It is important to pay super as it is going to help you finance your life once you retire.
The superannuation rate in Australia is 11%. You can only withdraw this money once you retire or under certain circumstances.
GST on Superannuation
To apply GST on something, it must be counted as a supply. Supplies cannot be GST free. Superannuation fund is not a supply from any angle, therefore it is not subjected to GST.
Australia GST Exemptions
GST exemption is a system in Australia that allows certain expenses and goods exempt from the GST. This means that individuals don’t have to pay GST on them and companies don’t have to charge GST on it.
Here’s a list of few items that are GST exempt:
- Basic food items
- Educational services
- Healthcare services
- Residential rent
- Religious activities.
- Loans and insurance
- Precious metals
And the list continues….
In this article we have discussed one of the most recent GST reform updates. You also get to know about various GST factors in Australia in this article.
GST is a crucial element of Australia’s economy and it is equally important for citizens as well to be aware of it as they have to face the repercussions of it. Their whole financial system is managed by these GSTs. Therefore, it is important to be well aware.