ubergeeknz: I'm with you on getting rid of GST. With the rise in online purchasing and therefore personal importation, I think it's really had it's day, aside from all the other problems with taxing on purchases.
As far as taxes go, GST works quite well. It's a low(ish) rate, with simple rules a broad base, and its pretty difficult to avoid. In terms of personal imports it isn't much of a big deal revenue wise. They lose some potential revenue, but it's on low value transactions where it would cost more to collect than it's worth. Compared to the lost tax, and potential to get more money through better enforcement, this is small beer compared to income tax and company tax. Plus:
- while some people (criminals with undeclared and untaxed cash drug income etc, those with very clever lawyers and accountants, and those with income hidden offshore) can avoid income tax, they have to spend the money somewhere so at least society gets a bite, and
- it's a tax on consumption, rather than work and saving (and surely that's the incentive we want).
Repealing GST would require a fairly big sum to be raised.
A big rise income tax would make avoidance much worse, create huge incentives for skilled people to work offshore for a decade or so, penalise work compared to consumption, and encourage smart people to spend their time/effort on tax minimisation and advice rather than actually producing things.
A big rise in company tax would drive businesses offshore, and create a huge incentive for them to invest in better tax lawyers and accountants rather than producing stuff.
Capital gains tax is an option (bear in mind capital gains are already taxable in many situations). But only if the family home isn't exempted. Exempting the family home will create a huge incentive to pour even more of your savings into your house (tax free capital gains) instead of a business where any value you create is taxed. Bias towards housing instead of productive investment is already a huge problem, and the exemption would make it worse.
A financial transactions tax which some promote as a painless way of getting huge revenue, painlessly and with a tiny tax, is fantasyland. It wouldn't raise a fraction of what is claimed, as the tax base would evaporate. The underlying transactions would simply and easily just move offshore.
Better to just suck the lemon, and admit that no taxes are perfect but (as far as taxes go) GST is better than many. Don't let the issue of small personal imports not being assessed for GST become the tail that wags the dog.