The suggestion is that in times of resource constraints GST could be increased across the board with the extra tax revenue hoarded to be given back as a GST cut during weak economic periods.
This whole idea is actually quite ridiculous for a couple of obvious reasons:
1. We have a fixed GST rate on everything. Any increase in GST will affect poor people. Basics such as food and electricity will become more expensive.
2. Governments never give anything back. You can guarantee that any extra tax revenue will not be put aside and will instead be pumped into the consolidated fund.
3. It would be easy to defraud. Any small business could purchase that new TV or car and simply claim back the GST as they do now.
Our Reserve Bank is fast becoming the Ministry of Silly Thoughts.
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Comment by Grant17, on 6-Aug-2007 10:20
"Our Reserve Bank is fast becoming the Ministry of Silly Thoughts."
I couldn't agree more with you Jama. A floating GST rate is one of the stupidest monetary policy ideas I've ever heard of. Imagine the compliance costs imposed on businesses! Many of us would need to get patches made to our accounting systems as the 12.5% rate is hard-coded in a lot of cases.
Aaaarrrgghhh -- this sort of "innovation" is something we could well do without.
Why don't the Reserve Bank put their efforts into developing a more sophisticated monetary policy than their current "blunt instrument" interest-rates only approach?
Comment by Bung, on 6-Aug-2007 11:32
"Many of us would need to get patches made to our accounting systems as the 12.5% rate is hard-coded in a lot of cases."
Was this by Screw The Customer Software Inc? Who thinks that GST will never change?
Comment by Grant17, on 6-Aug-2007 13:26
"Was this by Screw The Customer Software Inc? Who thinks that GST will never change?"
Oops, you're quite right Bung, I didn't look hard enough in our accounting software the first time. I found the place to change it eventually
It would still be a right PITA though having some accounting periods using a new rate, and some the old rate, during the changeover period.
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