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----- Original Message -----
From: Livingwater
To: Undisclosed
List
Sent: Sunday, 13 February 2000 3:21 PM
Subject: Fw: The biggest GST cheats are Howard and
Costello ----- Original Message -----
From: Robert Balgarnie
To: Livingwater
Sent: Saturday, February 12, 2000 6:30 PM
Subject: The biggest GST cheats are Howard and Costello The biggest GST cheats are Howard and Costello Terry McCrann JOHN Howard and Peter Costello are now exposed as the biggest GST cheats of them all. They are putting in place a vicious hidden tax that will rip hundreds of millions - and indeed over time, billions - of dollars from motorists. I'm not talking about the GST itself, bad enough as that might be. But the vicious GST version of "bracket creep". Simply, the way the excise tax on petrol is increased every six months in line with CPI inflation. And then, the GST on petrol will increase on that excise hike. Yesterday, the excise on petrol went up 0.7c per litre to reflect the rise in CPI inflation in the six months to December. What is not understood is this means a 0.07c a litre rise in the GST on petrol when the GST starts on July 1. These may not sound like big numbers. But the 0.7c yesterday adds an extra $112 million in excise tax to Canberra each year from motorists. And that "tiny" GST increase-on-the-increase will itself rip an extra $11 million of annual revenue from motorists. But the really vicious - and punishing - bit comes from the interplay between the introduction of the GST, inflation and the automatic petrol excise rise next February. The GST is now certain to lift the CPI by at least 3 per cent, more likely closer to 4 per cent, and it could even be more. If it pushes up the CPI by 4 per cent that means it will also increase petrol excise by 4 per cent. That would add $320 million to motorists' annual petrol bills. But there's more. Because GST is paid on the excise - a straight tax on a tax - that would also add $32 million to the annual GST petrol bill. In short, by this time next year motorists are almost certain to be paying more than $600 million extra a year in petrol taxes. Made up of yesterday's 0.7c per litre excise hike - and the hidden 0.07c on the forthcoming GST - plus a likely similar 0.7c or so (plus 0.07c) in August for whatever the CPI goes up in the June half. Plus the really big hit in February next year when the excise will rise by at least 2c per litre - plus the extra GST of 0.2c on that extra excise. So the $600 million-plus of extra petrol taxes by next year will be made up mostly of an extra $550 million or so extra excise tax. With more than half of that flowing directly from the inflation caused by the GST. But also an extra $55 million or so of GST tax on that extra excise tax. A straight tax-on-a-tax. It's Important to understand that none of this is avoided by the Government's "promise" to balance the GST on petrol with a cut in the excise. Broadly, assuming a pump price of 77c a litre, the government has said it will cut the excise by 7c a litre, reducing the pre-GST price to 70c. So that when GST is (immediately) applied, at 10 per cent to that 70c, the actual price springs back to 77c. So there's supposedly no change. But all that promises to do, is to have the petrol price on July 1 the same as on June 30. It does not "give back" the increased excise - and GST - that occurs before June 30 or after July 1. That would only happen if the Government abandoned automatic indexation of the excise in line with the GST. And it will get worse, much worse. It's bad enough that motorists are going to be slugged more or less immediately an extra $600 million in GST and excise taxes each year - mostly directly because of the GST's arrival. But if inflation stays at just 2.5 per cent a year, by 2006, they will be paying an extra $1 billion a year on petrol excise. PLUS an extra $100 million a year on the direct GST tax-on-the-extra excise tax, making something like $900 million a year of GST tax on the excise tax. There is also a serious problem with the Government's proposed "7c-off, 10 per cent-on" switchover at July 1. And it's a problem which would directly hit people in the country, making an utter mockery of Howard's hand-on-the-heart trek in the bush. The switch works okay at a 77c pump price. But petrol prices are always higher in the country, sometimes as much 20c a litre higher. Take a 92c country petrol price. The 7c comes off, but when you then add the 10 per cent GST, you go back to 93.5c. That would mean the pump price clearly going up because of the GST, making not simply a mockery of Howard's concern for the battlers in the bush, but out-and-out liars of both him and Costello. The only way to prevent this is to have a much bigger cut in the excise, using the maximum country price as the reference point. But they would still be suffering against city motorists, who would actually pay less actual GST and get a lower pump price than before. In simple, unarguable terms, the application of the GST on petrol is going to screw people in the bush, in comparison with those in the city. But the inter-reaction between inflation, excise increases and GST on the excise, is going to screw all motorists. And screw them by an ever-rising amount. It is truly the GST version of 'bracket creep' where taxpayers pay more real tax each year just because of inflation. |
