In Australia we have one of the lowest consumption taxes in the world: 10%. It’s a value-added tax (VAT) but, like New Zealand, we call it a goods and services tax (GST)
In principle such taxes are supposed to be levied on everything, at as low a rate as possible, so as to be non-distorting. But when it was introduced in 2000 it had been mauled in Parliament and many goods and services were exempted. I blame the Greens for the mauling, but that may not be wholly fair.
One consequence has been that special interest groups have been able to characterise it as a ‘luxury tax’ because it’s not applied to things like fresh and minimally processed food (eg milk and cheese). I have posted before about the absurd campaign to exempt feminine hygiene products: the phrase ‘tampon tax’ is unfortunately alliterative, lending itself to sloganeering.
Out of interest, I have kept all my receipts over the past 5 weeks, to see how much GST I’m actually paying. Excluding household utilities, I have spent $598.74, of which $19.65 was GST. This means an average rate of 3.4%. If I hadn’t bought a case of wine it would have been 2.0%.
2 thoughts on “Consumption Tax”
I should point out that Mrs SG’s expenditure and household bills are not included; and I am, after all, a struggling author!
5 weeks $598.74 which includes a case if wine. Sounds like the budget of derelict “wino”.
Seriously, I’d never ever guessed that the 10% GST component could as little as 3.4%. A revelation.