THE DEBIT TAX
Dump 40 Federal Taxes and get a Budget Surplus
with NO GST
Our current tax system is a disaster. Criticisms of the system made by local Industries, Welfare Agencies and others including small business operators.
The criteria for a good tax system, which was endorsed by the National Tax Reform Summit in Canberra on 3rd. October 1996, is as follows:
- The tax system must be simple
- It must have low compliance costs
- It must be transparent (no hidden taxes)
- It must not be avoidable, especially by the rich
- It must be adequate (raise sufficient revenue)
- It must be sociably equitable
- It must be efficient.
The current push by the government to introduce a GST, in conjunction with the existing taxation system cannot possibly rectify the problems, or meet the criteria for a good taxation system, listed above. Wherever indirect taxes
have been introduced, they fall most heavily on the poor and cause a great deal of unproductive work and expense for small business. The debit tax proposed herein would solve all of the problems with our existing tax system and meets all the
National Tax Reform Summit criteria for a good tax system - and much more.
The debit Tax is a very simple tax on all withdrawals from all bank and financial institutions accounts. This tax would instantly deposited through the Electronic Funds Transfer (EFT) system into the Commonwealth Treasury. The
debit Tax would replace al.-!l existing Commonwealth Government Taxes - it is not an additional tax. There is no reason why this cannot be done right now. Most State governments currently collect a bank account debits tax - but only on a sliding
scale - IT IS NOT EQUITABLE. The Debit Tax on the other hand is both fair and equitable
The fundamental arithmetic of the Debit Tax is simple. The Reserve Bank figures indicate total withdrawals from banks and financial institutions are approximately $200 billion per working day. A tax of one third of a cent in the
dollar on these withdrawals would yield $660 million to the Treasury each working day. The annual yield to Treasury would be approximately $170 billion. Current annual Commonwealth expenditure is approximately $150 billion per annum. The
debit tax of one third of one percent (0.33%) could therefore replace all existing Commonwealth taxes and still result in a surplus of many billions available to the Commonwealth Government.
|Benefits of the Debit Tax
Obviously the $ billions surplus resulting from the Debit Tax would be useful to fund pressing national priorities without selling off more national assets. For example:
- Pay off national debt
- Fund run down health and aged care programs
- Funding national infrastructure and industry assistance programs and restore full employment.
- Fund defence programs to secure our sovereignty and independence in an increasingly unstable world.
|The major benefits of the Debit Tax are summarised below
- No tax on wages, profits, savings, investments, assets, fringe benefits or capital gains.
- No taxes on payroll, property, inheritance, goods and services and no provisional tax.
- No income tax and sales tax effectively means an instant large wage rise for everyone with no cost to employers. This will stimulate demand, profits and employment (no sales or hidden taxes means more in the pocket for those in the welfare
- Goods and Services will be cheaper without the imposition of a 10% GST on a vast number of purchases, and no excise on fuel. This will dramatically reduce inflationary pressures on the economy, which drives up interest rates, and will increase the
competitiveness of Australian industries.
- The method of collecting revenue will be
- effected by Electronic Funds Transfer systems (EFT) - the ultimate in efficiency. No bureaucracy is required.
- The Taxation Office could be entirely abolished. No more tax returns for business or private persons. No more intrusive government prying into private financial affairs. No need for Tax File numbers, tax identification cards etc.
- Accountant employed by businesses, large and small, would be able to use their training and experience in the manner in which it ought to be used, ie. making business more productive and efficient.
- Small businesses will not be burdened by our present costly and time consuming system. This will promote higher profits, investment, growth and employment in the only sector which can solve our unemployment problem rapidly.
- Foreign multi national companies will be required to pay their fair share of tax.
- Tax avoidance and cheating would be virtually impossible and, with the tax rate of one third of a cent in the dollar, the incentive to do so would be absolutely minimal
- Our large and expanding national debt will be settled very quickly.
- Australia will become a tax haven, stimulating productive national investment.
- It would allow people to save far more money for retirement, with no penalties.
- Our National Fund Reserves would be rebuilt by an increase in savings deposits - deposits encouraged by a Debit Tax system. At present our reserves are at their lowest since the Great Depression.
|Business Implications of Debit Tax
The Debits Tax would effectively apply to the turnover (revenue) of a business. But, in the vast majority of cases the owners will be much better off. Because of the absurd complexity of the current taxation system, a general
comparative analysis between the existing tax system and the Debit Tax for all businesses is beyond the scope of this paper. However, the simplest examples are given to demonstrate the approximate benefits of the Debit Tax to a small business owner.
Suppose the turnover is $1 million and the profit distributed is $100,000.
Under the existing tax system
|Typical income tax on $100,000
||= $ 35,000
|Disposable income remaining
||= $ 65,000
|Typical indirect taxes on $65,000
||= $ 13,000
|Total Tax = $35,000 + $13,000
||= $ 48.000
Under the Debit Tax system
|Debit Tax on business expenditure
||= $ 3,300
|of $1M @ 0.33%
|Debit Tax on profit of $100,000
||= $ 300
(as withdrawn from owners personal account)
Total Tax Paid
|= $ 3,600
|Inexplicable Government Disinterest
The Treasurer, Mr Costclio, has refused to have his department consider the Debit Tax. If you wish the Government to investigate the Debit Tax or require more information, write to:
FIND OUT MORE
ABOUT THE DEBIT TAX CONCEPT
(the only fair and equitable taxation system)
The Victorian Taxation Reform Group Inc
||Fax: 0356 783337
||Fax: 0351 271617
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