Channel 7 News at 12 December 2023
Channel 7 News on 12 December 2023 shows that Cash will be gone, and banks and outlets may charge a handling fee.
Revolutionising Taxation:
A Proposal for an Efficient Tax System
Note: Although I am discussing this system in the context of Australia and New Zealand, I believe that this concept could be adopted by any nation worldwide.
It had been years since I resolved to inform the New Zealand Government and friends of my concept for a New Fair Tax System as a Transaction Tax – before 2012 arrived.
Thus, in 2012, the novel idea that would transform the taxation system in Australia and New Zealand materialised. According to a news article disseminated by the media at that time, tax evasion and tax fraud annually cost the nation billions of dollars. Thus, the proposed solution addressed a multitude of exemptions and inefficiencies while presenting an innovative strategy that could eradicate the current tax system, including the GST and income tax.
The Concept: A Transaction-Based Tax System
The essence of this plan is to establish a transaction-based tax system that would be smoothly incorporated into electronic (from any credit card used at retail or business transactions) and cash transactions conducted at banks. A portion of every transaction would be subtracted and promptly remitted to the ATO (Australia Tax Office) or IRD (NZ Inland Revenue Department) Treasury. The computed percentage may vary from 0.5% to 1%, or even lower, and may be constantly modified to guarantee the stability of government finances and responsibilities.
Key Features:
- Extensive Coverage:
The transaction tax would apply to all electronic and cash transactions, including bank bill payments, international transactions, transfers to tax havens, cash deposits, credit card purchases and transactions, and property sales.
- Simplified Exemptions:
Some exemptions, such as personal or company bank account transfers, may be designed to minimise administrative expenses. Nevertheless, the objective is to reduce the number of exceptions to preserve simplicity and efficiency.
- Dealing with Cash-Based Transactions:
Cash transactions, well-known for facilitating tax evasion, would be subject to a double tax rate when deposited in banks. The purpose of this legislation is to discourage transactions that involve the use of cash and encourage the use of electronic transactions.
- Impact on Overseas Purchases:
This tax scheme applies to international online purchases and credit card transactions. It would include platforms like eBay, Facebook Markets, TradeMe, and other digital marketplaces. Foreign Companies are exempt from collecting Goods and Services Tax (GST) and submitting a GST report in Australia or New Zealand. I.e. Google, Facebook, Microsoft, and the list goes on.
Advantages and Elimination of Current Issues:
The suggested tax system offers a multitude of benefits and seeks to address many issues inherent in the current taxing framework, not to mention the frustration and fairness to all:
– Elimination of Tax Evasion and Avoidance:
Through directly deducting taxes from transactions, the system eliminates the need for GST returns, tax departments, and the requirement to follow up on late payments, bankruptcy proceedings, court expenses, and penalties. It significantly reduces the opportunity for tax evasion or avoidance by billions of dollars.
– Streamlined Governance:
Vast and significant cost savings will be achieved by eliminating many tax-related governmental offices, provisional tax needs, and intricate Company and Personal record-keeping obligations. No longer is 7- or 10-year record keeping necessary.
– Enhanced Accountability and Transparency:
Companies will be motivated to uphold transparent financial documentation and prioritise effectiveness and profitability rather than engaging in labyrinthine tax strategies and questionable cost-cutting measures.
Challenges and Addressing Concerns:
In 2012, the concept faced opposition and doubt from the then-Finance Minister Bill English, who raised worries about transitioning to cash transactions to avoid the proposed system. Nevertheless, as previously said, practical measures to address this issue include increasing the cash deposit tax rate to double (or any other rate), discouraging the use of cash, and promoting transparency.
Suppose an individual purchases a BMW for a total sum of $150,000 in cash! In such a case, the BMW dealer responsible for depositing the funds to acquire a new BMW purchase from Germany would be liable for the additional Transaction Tax. He cannot benefit from transferring any discounts to the customer and may charge a cash fee, as depositing the cash in the Bank reduces his profit.
Furthermore, this proposal gains additional relevance and feasibility in the contemporary context where countries like Australia are moving towards a cashless society.
See the Channel 7 News 12 Dec 2023 video clip at the beginning of the Article on how Cash will be faced out and even becomes an effort to handle in any transactions.
Bill English Response 2012
Here’s an introduction to the response you received from Finance Minister Bill English regarding your proposal for a new tax system, specifically a financial transactions tax:
“In a response dated 05 November 2012, Finance Minister Bill English acknowledged your correspondence dated 23 October 2012, addressing a proposal for a transformative tax system. The Minister’s reply encapsulated an evaluation of your suggestion, particularly focusing on implementing a financial transactions tax to replace income tax and GST. Highlighting historical global attempts and challenges countries face in adopting such measures, Minister English emphasised the inherent complexities in generating substantial revenue to substantiate a shift away from established income and consumption-based taxation models.”
Read more by clicking on the picture.
Conclusion:
A Fair and Efficient Tax System for All
In basic terms, the proposed transaction-based tax system offers a fairer tax framework by guaranteeing that individuals pay proportionally to their transactions. It would prompt government income, prevent tax avoidance, and promote transparency in diverse financial operations. Additionally, there are significant cost reductions in various departments, buildings, and the governmental and business workforce.
The method promotes a more equitable distribution of the tax burden, with the wealthy bearing a more significant share, reducing the tax burden on the less fortunate. The adaptive character of this system enables the government to make dynamic changes, assuring both fiscal stability and fulfilment of financial commitments. If there is an excess in the Treasury, it is possible to decrease the proportion of transaction fees. It is enabling its residents to have an improved quality of life.
Despite the presence concerns, the concept has significant promise in terms of enhancing efficiency, generating money, and promoting justice. Consequently, it represents a compelling opportunity to rethink taxation systems.
This plan can potentially establish a tax system that is more fair and effective, which would benefit the country by reducing tax evasion, simplifying administrative procedures, and guaranteeing a more equal distribution of the tax burden. Applying this might significantly shift how societies handle taxes, promoting more openness and financial responsibility.
Beat B. Süess
© 2012 – 2024
PO Box 111, Granville NSW 2142
Latest Update on May 13, 2024
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