The dismissal of the tampon tax seems like a good move but is it the best move? | Greg Jericho | business | The Guardian

This week’s economic news was the GST, with the announcement of the removal of GST from tampons and other sanitary products, and the government forward in the implementation of the plan to rejig the way the GST is carved between the states. All the cars look great at first glance but in fact are symbolic acts aimed at making her look like things are being done instead of solving the underlining issues.

Axe GST on tampons would be about $ 30 million per year in revenue or less than 0.5% of the total amount of goods and services offered in each year. It’s such a small amount that you have to wonder what took everyone so long.

One problem is that the GST is a bit of a Dogs Breakfast of a tax. It is supposed to be efficient taxes, but it has a lot of exemptions – meaning – it is rather complicated. In fact, consumption taxes around the world all the exemptions in place, such as fresh food, because the tax is retrospective in nature and therefore governments always have to do deals to get them.

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In Australia the major exemptions on fresh food, education and health care. All of these look nice and provide exemptions – the imposition of taxes on education, for example, looks like a backward thing to do. However, it means that private school fees are exempt, so it actually removes one of the few areas of taxation where the richest people spend more of their income than low-income earners.

But right from the get-go pads for the tax – not because, as was said in some media, they were considered luxuries (many of the necessities such as toilet paper are taxed), but because they were not considered health care.

So the long campaign about that the tax be removed to a copy of the report in the subject from any position of 2000 refers to the “e-mail” petition in tones that indicate that some new-fangled to do things.

And yet it took until now for it to be removed, despite the fact that once that was done all the kids clamoring to take credit. The Greens, the ALP, the government, and even Liberal Democratic Senator David Leyonhjelmwants the credit. That shift in policy which is universally supported taking a long time to reach fruition says a little bit about how difficult it is to achieve changes to the GST – even symbolic ones such as this.

Because the reality is change is mostly symbolic – it was part of the problem. Didn’t solve the issue they only need to be paid, and so far no one was willing to come up with a way to pay the $ 30 million decline in revenue. The argument was that it was just one of the exemption would reduce the GST is already diminished base.

I’m not too concerned about it-a very small cut – but it would be nice if such a step would actually achieve something worthwhile.

But as Eleanor Robertson noted once again in 2015, removing the GST on tampons won’t do much to help the cause of gender equality. The issue is that all women – especially those from low-income unlike men, you have to pay for health products, they do not have to pay the additional 10%.

The most real solution to the problem may be, for example, to maintain a use tax of $ 30 million to provide free sanitary pads products women’s wages lower than a certain level of income.

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The symbolism, however, always forget to do something big, especially when it comes with a easy credit points.

The same thing can be said about the government’s plan to rejig how the GST is divided.

Prime Minister Scott Morrison was in Perth this week due to Western Australia is why the report of the GST this hot political issue.

While other states get more or a bit less, per capita of GST, Western Australia – because of the giant mining royalties – receives much less. In 2017-18 he received only 34% compared to what you may receive on a per capita basis about 4.4 bn lower.

The government’s March issue to the Productivity Commissionand the fish Treasurer Josh Frydenberg, this week, you would think that the government has continued the committee has taken upon its recommendations.

Frydenberg told reporters after the meeting with the treasurers it was a “very good discussion about the goods and services tax, including goods and services tax on feminine hygiene products, and the distribution of goods and services, in the wake of the Productivity Commission’s recommendations”.

With the exception of the Productivity Commission does not recommend at all what the government is doing.

The government brought in 70% of dogs on any state per capita. But the commission said that such a policy “represents a Band-Aid solution, as it is not addressed to the wider efficiency and fairness problems.”

The government also put more money in the GST pool to ensure (or at least try to ensure) that no state is worse off because of 70% of the dog. But the committee said this plan was that “highest funding is always subject to the association budget. It should only be considered in the context of a broader reform of federal financial relations that generate compensation benefits.”

And of course, none of these wider reforms, such as the replacement of stamp duty with land taxes – are determined.

So the government has taken the option that is always open to the government – throwing money at the problem, claiming that it was the task of reform. Previous governments have avoided doing that because this money has to come from somewhere, it just means the state end up fighting for more money.

The prime minister this week boasted that the government provide more money in the pool “out of the GST resources”. This is a nice way to say of other taxes – $9bn more than 10 years worth of other taxes.

It does not fix any problems – already New South Wales and Victorian governments, pointing to the background in politics – namely, that if the government projections on the error would be more money than expected to keep Western Australia over 70% of the floor funds that are supposed to come from the other states share of GST.

And so we have again the usual inter-state and state and federal bunfight on the goods and services tax. Will ever be the case while the symbolism of a quick solution is the preferred option.

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