youngster

There are very few tax dodges left in Australia, even for the very rich. If you earn money here, as an individual or a company, you can't really avoid tax. Even with complicated trusts and other structures, there's not much that can be done to avoid paying tax. I've had long chats with a colleague who is a Chartered Accountant about this issue. He worked with big companies and high net worth clients, and even they couldn't excape the clutches of the Tax Man. The only way to avoid paying tax is to make big losses (eg, negative gearing), but in that case, you still lose money, but to the bank, not the ATO.

In 2010-11, the Commonwealth collected about $205 billion in income tax. Annual GST revenue is worth about $50 billion. So the GST would need to be 50% to compensate for the loss of income tax revenue. This would massively disadvantage people in the lower income brackets, who currently pay little or no tax. High income earners would actually pay less tax, because they currently pay 40+ per cent income tax, and 10% GST on purchases, luxury car tax on vehicles, etc. Then, there is the question of what to do with capital gains. You also have to consider people who would earn money in Australia income tax free, then go overseas to spend most of their savings. The other issue to consider is that the GST, although collected by the Commonwealth, is actually a tax designed to fund the States. Inflation would instantly soar, requiring massive extra funding for the welfare system. State Governments buy goods and services, so their costs would massively increase (eg, hospitals, etc). Then there is the political angle to consider - which politician is prepared to be responsible for increasing the price of everything by 40%, overnight?