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Australian Gst Essay

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GST Essay

Australia, economically, is one of the strongest economies in the world. The debate on how to develop the economy even further is, and always will be a never ending one amongst Australia, and also the rest of the world. In 2011, Australia was the 13th largest national economy by supposed gross domestic product (GDP). This year its economy was the fastest-growing in the developed world for the first three months of 2012. Experts suggest that the answers lie within the tax system, to further improve the economy. The Goods and Services Tax (GST) in particular has come under the microscope of recent time, as to how changes to the GST could benefit Australia. Small tinkering’s to the current taxation system can definitely raise
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An Economic Reforms Priority research report issued by the Grattan Institute dissects the possible benefits of tinkering with GST. It calculates that the GST-exempt goods and services equate to about 40 per cent of consumer spending, which means the government gives up about $30 billion a year in revenue. The institute recommends the GST be applied to all of these exempt goods, thus the additional revenue could fund substantial income and corporate tax cuts that would increase economic growth. This would raise an extra $31 billion a year in revenue and add $20 billion a year to the economy or an extra $870 a year income for everyone. The tax system would be far simpler for the Australian people. * John Daley, Grattan Institute, 2012
Inefficient, or misinterpreted taxes are complicated and don’t ensure a certainty of collection. An analysis by the Grattan Institute shows that if the Australian governments collected more revenue from efficient taxes that encouraged economic activity, and less from inefficient ones, GDP could increase by $25bn a year within a decade. There’s also the certainty of the non-taxed money that’s been hiding in the large underground cash economy in Australia, with estimates of unrecorded income tax to be approximately 15 per cent of official gross domestic product (GDP) back in 2005. The lowering of income tax combined with a broadening to the GST base would see tax evasion having far less rewarding results, as the
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