MARK BARNES: Eliminate income tax, adjust VAT and watch spending rise
There has been almost universal condemnation of the decision to increase VAT, and some of that may be due
The truth is that the ponds from which the government can fish have diminished and continue to do so. We have little choice but to cast our net over a wider dam. There was no choice but to increase value-added tax (VAT) in the budget. The increase from 14% to 15% is, of course, a 7% increase, not 1%. Compounding that with other consumer tax increases such as excise duties and the fuel levy, while still also increasing the marginal tax rate for individuals, doesn’t bode well for those who are already overindebted — and that’s most of us. Perhaps the Reserve Bank should have reduced interest rates to accompany the budget tax increases? There has been almost universal condemnation of the decision to increase VAT, and some of that may be due. It certainly doesn’t help with inequality, as it works today. Think of it differently. Structurally, VAT (or some similar construct) might well be the solution to an efficient budgeting process. Every year the required VAT to be applied to the cons...
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