Rich people whingeing

[The Edukator]

Savings where? On the extra tax being paid? If that's the case it seems unlikely because people just won't negative gear a existing property and they won't pay anything at all ????

 

[Ratts of Tobruk]

Savings where? On the extra tax being paid? If that's the case it seems unlikely because people just won't negative gear a existing property and they won't pay anything at all ????

Negative gearing reduces the tax people pay. So the saving is in having less tax minimised. I'm not sure what the third sentence means. If you're referring to stamp duty there, then temoving NG is not going to stop people buying/selling existing properties.

 

[Power Raid]

Correct me if I'm wrong but isn't stamp duty one of the biggest revenues in Victoria? Likely nsw too and significant elsewhere.

Something to the tune of $2b?

If you remove the incentive for investors to buy existing dwellings it's going to hit that figure big time. Given the ALP mandate is to spend more than the the LNP, this is hardly conducive and both parties talk about reducing debt!

perhaps it makes the states more reliant on the federal govt than they already are. this fits into the centralisation policy of Labor to centralise and duplicate portfolios like health and education.

 

[Scotland]

Wasn't stamp duty supposed to be ****ed off when the GST came in?

 

[The Edukator]

Negative gearing reduces the tax people pay. So the saving is in having less tax minimised. I'm not sure what the third sentence means. If you're referring to stamp duty there, then temoving NG is not going to stop people buying/selling existing properties.

If the incentive to buy is removed they won't buy all. The lost stamp duty will not be offset by people paying more tax is what I was trying to say.

 

[Scotland]

Stamp duty is part of the problem as it is prohibitive to turnover of housing and further encourages speculating.

You could conceivably buy a house for $500k, spend a few months renovating it then sell it at a profit.

Except that stamp duty (WA) would be $18k. And you'd be taxed on 100% of any capital gain.

You're better off getting tenants in and using any equity built up to buy another house and the same and then another and another...

You're better off still just buying the place, renting it out and selling it at a later date once the value has risen due to inflation / population growth. Ridiculous.

 

[Paul Kersey]

Stamp duty and payroll tax can GGF.

 

[Ratts of Tobruk]

If the incentive to buy is removed they won't buy all. The lost stamp duty will not be offset by people paying more tax is what I was trying to say.

People who are only buying to negatively gear can still do it by buying a newly-built or to-be-built property.

 

[Elroo]

Wasn't stamp duty supposed to be stuffed off when the GST came in?

No.

In the original GST proposal by Howard it was. But to get agreement of the Democrats to pass the GST package, the Dem's wanted no GST on fresh food, the removal of stamp duties on home purchases was taken out of the package as a result of this agreement.

 

[The Edukator]

People who are only buying to negatively gear can still do it by buying a newly-built or to-be-built property.

You're not following. People are less interested in new than existing. Thus less purchasing and SD..

 

[The Edukator]

Stamp duty and payroll tax can GGF.

Payroll never made sense to me. Employ more people and we'll tax you more ????

 

[Ratts of Tobruk]

You're not following. People are less interested in new than existing. Thus less purchasing and SD..

No, I am following. There will be slightly less demand in existing property but prices are not expected to fall. Rather they're expected to rise more slowly. The main reason for the policy move is because young people want houses but are getting priced out. They are still going to want houses. Houses will still be bought. Obviously. But the price will be slightly less as less people will be getting a tax deduction for owning an investment house. Which means SD will only be slightly less and the savings on NG will be higher. Are you following?

EDIT: And of course demand will now be higher in new properties, which still are allowed to be negatively geared which will mean prices are higher for them - or, more likely, that more new properties are built to match that demand. More properties, more sales, more SD.

 

[Chief]

You're not following. People are less interested in new than existing. Thus less purchasing and SD..

So negative gearing has no impact on house purchases?

 

[Long Live HFC]

If the incentive to buy is removed they won't buy all. The lost stamp duty will not be offset by people paying more tax is what I was trying to say.

stamp duty is a state tax.

 

[Long Live HFC]

No.

In the original GST proposal by Howard it was. But to get agreement of the Democrats to pass the GST package, the Dem's wanted no GST on fresh food, the removal of stamp duties on home purchases was taken out of the package as a result of this agreement.

no, stamp duties are a state tax. the states simply didn't follow through on their end of the deal, which included many different taxes.

 

[Elroo]

no, stamp duties are a state tax. the states simply didn't follow through on their end of the deal, which included many different taxes.

no, stamp duties are a state tax

I know stamp duties are a state tax, the original GST proposal put forward by Howard was a blanket GST of 10% on everything including fresh food. In return for this revenue the states would have been required to remove most state taxes including stamp duties.; list below for the original state taxes to be removed in return for a universal 10% GST.

· The financial institutions duty.

· The bank accounts debits tax.

· The NSW accommodation tax.

· Conveyancing duties on transfer of business property.

A range of other stamp duties on leases, mortgages, sales of shares, cheques and credit arrangements.

the states simply didn't follow through on their end of the deal, which included many different taxes

No all states removed the taxes required by the amended GST deal Howard negotiated with the Democrats.


http://www.theage.com.au/news/Natio...ttom-of-the-GST/2005/03/07/1110160752766.html

Getting to the bottom of the GST

March 8, 2005

Page Tools


What's the deal? Peter Costello displays the GST agreement with the states during debate in Federal Parliament yesterday.
Photo: Andrew Taylor

Peter Costello is at war with state governments over the details of the GST. Are the states, as he says, gaining a vast windfall? Have they failed to roll back other taxes as promised? Tim Colebatch examines the evidence.

Last week everyone was talking about the bad news on the economy: a record current account deficit, growth officially slumping to 1.5 per cent, interest rates up and perhaps another rise ahead.

So what were Prime Minister John Howard and Treasurer Peter Costello to do: change policies, or change the subject?

Howard and Costello have decided to change the subject. In a weekend media blitz, the PM and Treasurer suddenly turned their guns on the (Labor) states, implying they had reneged on a 1999 agreement to use windfall gains from the GST to abolish a host of state taxes most of us have never heard of.

"The Victorian Government, for example, has a windfall of $285 million in this financial year, that could have been used to reduce some of these taxes," Costello told 3AW yesterday. "I insist on Victoria honouring its agreement."

In Parliament, the man Labor calls Australia's highest-taxing Treasurer expanded his attack. "We will be holding state governments to the agreement that they signed in 1999, because we're going to stand up for the taxpayers and consumers of Australia," he declared.

Utter bunk, say the premiers and state treasurers. "Firstly, we've honoured agreements to date," said Victorian Treasurer John Brumby.

"Secondly, we're actually ahead of schedule. And thirdly, in relation to these other taxes, there's actually no timeframe laid down. They're subject to review."

It is a long way from the federal-state co-operation that marked the birth of the GST: the (almost) comprehensive tax of 10 per cent on sales of most goods and services, introduced on July 1, 2000. In a rare act of self-sacrifice, the Howard Government bore the pain of raising a tax that would be almost entirely given to the states — then, of course, mostly Coalition-run.

This has ended forever the annual bunfights at the Premiers' Conferences over how much money Canberra would give the states. But as all eight states and territories have passed under Labor rule, the Howard Government appears to be regretting its generosity.

Last year it clawed back $1.65 billion in competition payments earmarked for the states in 2006-07 and 2007-08. And when the federal and state treasurers meet on March 23, Costello appears to be planning some kind of ambush to demand that the states pour all their gains from the GST into cutting taxes rather than spending more on health, education and other services.

What was the deal?
The Howard Government's original plan for the GST envisaged the states abolishing a swag of financial taxes, which in effect would be replaced by the GST. They included:


· The financial institutions duty.


· The bank accounts debits tax.


· The NSW accommodation tax.


· Conveyancing duties on transfer of business property.


· A range of other stamp duties on leases, mortgages, sales of shares, cheques and credit arrangements.


Then came the GST deal with the Democrats, which removed the GST on food, knocking a big hole in the revenue forecasts. The Democrats proposed that it be filled by paring back the income tax cuts and increasing taxes on petrol — thereby leaving the original agreement with the states intact.


Howard and Costello chose a different course. They decided to keep the states' stamp duties to pay for the lower GST collections. Under the new deal announced by Howard on May 31, 1999, just three state taxes were earmarked for immediate abolition: the financial institutions duty, the accommodation tax and the stamp duty on transfer of shares. A fourth tax, the bank accounts debits tax (dubbed the BAD tax) would be removed from July 1, 2005.


But removal of all the stamp duties, including conveyancing duties on business property, were deferred indefinitely.


Otherwise, under the agreement, the Commonwealth would have had to underwrite the costs of abolishing them if GST revenue fell short — something it was unwilling to do.

Despite Costello's claims, the agreement signed by Howard and the premiers in June 1999 did not commit the states to abolish any stamp duties. Section 5 (vii) stated specifically:


"The Ministerial Council will by 2005 review the need for retention of stamp duty on non-residential conveyances; leases; mortgages, debentures, bonds and other loan securities; credit arrangements, instalment purchase arrangements and rental arrangements; and on cheques, bills of exchange, promissory notes; and unquoted marketable securities."


The only commitment the states made was to "review the need" for these taxes. Heads of federal and state treasuries have been meeting to do so, and this review will come to a head when the treasurers meet on March 23.

One point is worth noting. Costello yesterday told 3AW that the stamp duty on business conveyances "includes things like goodwill, trading stock, chattels and licences and . . . the whole range of things in that area". The agreement shows in fact his proposal is far broader, taking in all "non-residential conveyances".

Put plainly, Costello is arguing that people should have to pay stamp duty when they buy a residential property, but would be exempt if they buy a shop, office, factory, or any other business property. One reason the states have not done so is that discriminating against homebuyers defies the political law of gravity.

Have the states kept their promise?
Yes. All states abolished the financial institutions duty, accommodation taxes and stamp duties on marketable securities by July 1, 2001, as promised. NSW has already abolished the BAD tax as well. Victoria has yet to produce legislation, but a spokeswoman for Brumby said yesterday it will be passed this session, and the tax scrapped from July 1.

This decision is locked into the state's forward estimates, which show an annual cost of $258 million. All states reaffirmed at last year's ministerial meeting that they would abolish the tax on schedule.

Some states have jumped the gun by abolishing other taxes on Costello's review list. Victoria unilaterally abolished stamp duty on mortgages from July 1, 2004, at a cost of roughly $230 million a year, Brumby says. It abolished stamp duty on non-residential leases back in 2001, and stamp duty on unquoted marketable securities in 2002. It never had a stamp duty on cheques.

That means Victoria now has only two of the taxes the treasurers are to review: stamp duties on non-residential conveyances, and stamp duties on hiring and hire purchase transactions. On Victorian Treasury figures, by 2005-06 more than $1.6 billion of the Victorian taxes targeted by the Commonwealth will have been abolished.

Can Victoria afford further tax cuts?
Last week, the Commonwealth Grants Commission recommended that Victoria be paid an extra $106 million of GST revenue in 2005-06, following a reassessment of state needs. Assuming Costello accepts this recommendation, and assuming consumers spend as much as federal Treasury has forecast, Victoria next financial year would receive $7.8 billion of GST revenue.

All told, based on figures published in last year's Victorian budget papers, including the cost of abolishing the BAD tax and mortgage duty, that would leave the state $124 million better off next year than if there had never been a GST, and the old arrangements had remained in place.

Victoria spends about $30 billion a year. That means the GST has made it 0.4 per cent better off: definitely useful, but hardly the "untold riches" that Howard spoke of in his interview on the Sunday show.

The GST take will increase over time. During last year's election campaign, Costello published a table showing that, on estimates at the time, the GST deal would make the states collectively better off by $2.2 billion in 2004-05, $1.8 billion in 2005-06, $2.7 billion in 2006-07 and $3.9 billion in 2007-08: a net boost of $8.4 billion over the next three years.

But by then, Howard had already swiped back $1.65 billion by cutting off competition policy payments to the states to pay for his National Water Initiative. He used the GST windfall to justify his move. Then in its midyear review, federal Treasury cut back its estimates of future growth in GST revenue to 5.4 per cent a year, lowering expected transfers to the states by another $1.58 billion over three years.

Those two changes between them have cut the expected net benefit to the states to $1.5 billion in 2005-06, $1.4 billion in 2006-07, and $2.3 billion in 2007-08.

Remember that GST revenues are directed away from the bigger states, so as to allow all states to provide an equal level of services, whatever their means. Most of that benefit will go to the smaller states.

Last year tax expert Professor David Collins of Macquarie University, in a study published by the Australian Tax Research Foundation, estimated that over the five years to 2005, the GST deal delivered NSW only $18 million and Victoria $306 million out of the $2.55 billion windfall to the states.

Collins backed up an earlier finding by Professor Ross Garnaut of the ANU and Dr Vince FitzGerald of the Allen Consulting Group, in a report for the Victorian government, that the system of grants to the states needs major reforms. Costello has effectively ruled out any change.

To sum up: Victoria next year will be $124 million a year better off under the GST. The cost of abolishing conveyancing duties on non-residential property, Brumby told Neil Mitchell yesterday, is "huge in its scope, probably $500 million per annum".

Can Victoria afford it? Not with this money.

If it did have the money, should it do it? Only if it thought this a higher priority than putting more resources into schools, hospitals or roads, or other services, or into building new infrastructure, or into cutting other taxes such as land tax, stamp duty for homebuyers, and payroll tax.

The Bureau of Statistics reports that, on each government's estimates, Australians will pay $265 billion in taxes this year. The Commonwealth would take $218 billion of that (including $35 billion of GST revenue transferred to the states), the states would raise $40 billion and local councils $7 billion.

 

[Long Live HFC]

I know stamp duties are a state tax, the original GST proposal put forward by Howard was a blanket GST of 10% on everything including fresh food. In return for this revenue the states would have been required to remove most state taxes including stamp duties.; list below for the original state taxes to be removed in return for a universal 10% GST.

good post, i got it wrong. appreciate the correction

 

[Pie eyed]

Starts a thread titled 'Rich people whinging'.

Nek minnit:



Ratts of Tobruk, you haven't corrected my 'big error' yet. Maybe stop worrying about what Belnakor and Power Raid think and focus on how negative gearing works. I'm still paying tax and want to get my income down below $20k. Ta.

Using the term "Nek minnit" is racist isn't it?
At best it's grammatically poor.
Shame.

(Channeling Derryn Hinch Senator Elect)

 

[Scotland]

Using the term "Nek minnit" is racist isn't it?
At best it's grammatically poor.
Shame.

(Channeling Derryn Hinch Senator Elect)

Riiiiight.

 

[Patrick Bullet]

I

Using the term "Nek minnit" is racist isn't it?
At best it's grammatically poor.
Shame.

(Channeling Derryn Hinch Senator Elect)

It's a meme

 

[Crankyhawk]

So in the theme of the title but a different tangent.

This rich person wants to know why high court justices are exempt from division 293 tax. This is where you get taxed at a higher rate as if your superannuation gets counted as income at full marginal rate for those who earn 300k or more.

I want to know what makes judges such special snowflakes.

 

[Ratts of Tobruk]

So in the theme of the title but a different tangent.

This rich person wants to know why high court justices are exempt from division 293 tax. This is where you get taxed at a higher rate as if your superannuation gets counted as income at full marginal rate for those who earn 300k or more.

"Division 293 tax will be charged at 15% of an individual’s taxable concessional contributions above the $300,000 threshold (which were capped for 2012-13 at $25,000)."

Given the above ATO explanation, I'm not sure what you mean by "as if your superannuation gets counted as income at full marginal rate"?

And there is also an exception for a "state higher level office holder", so presumably it's one of the perks granted to positions that have the ultimate influence on society's decisions.

 

[Crankyhawk]

"Division 293 tax will be charged at 15% of an individual’s taxable concessional contributions above the $300,000 threshold (which were capped for 2012-13 at $25,000)."

Given the above ATO explanation, I'm not sure what you mean by "as if your superannuation gets counted as income at full marginal rate"?

And there is also an exception for a "state higher level office holder", so presumably it's one of the perks granted to positions that have the ultimate influence on society's decisions.

Sorry worded the first bit badly - it's an extra 15% tax on super (which coupled with Turnbull propoSed super changes could mean parts of my 9.8% employer contribution get taxed at 45% (15% normal + 15% above 25k + 15% from div 293). Point was though what makes justices et al special snowflakes to avoid it. That is BS there - they are earning as well as me but get to skive and avoid tax that I pay because of their bs job is more valuable than mine (saving their arse in the ED)

 

[Ratts of Tobruk]

Sorry worded the first bit badly - it's an extra 15% tax on super (which coupled with Turnbull propoSed super changes could mean parts of my 9.8% employer contribution get taxed at 45% (15% normal + 15% above 25k + 15% from div 293). Point was though what makes justices et al special snowflakes to avoid it. That is BS there - they are earning as well as me but get to skive and avoid tax that I pay because of their bs job is more valuable than mine (saving their arse in the ED)

I know there's been some very generous salary sacrifice options available to medical professionals - so a fair comparison would have to look at whether judges get access to those. I know they recently altered one of the medical benefits (something like 'expenses' or 'hospitality'?) down to $2K, right?

My personal opinion is all these side benefits and things should be done away with. Too often it looks like ways to hide the actual benefits, and it's part of the reason I made this thread (rich people complaining about 'all the tax' they pay, when they actually pay far less than they let on). e.g. I don't paritcularly like tax deductions for individuals, and feel they could all be done through business structures, but of course fringe benefits/salary sacrifice takes advantage of that.

 

[Crankyhawk]

I know there's been some very generous salary sacrifice options available to medical professionals - so a fair comparison would have to look at whether judges get access to those. I know they recently altered one of the medical benefits (something like 'expenses' or 'hospitality'?) down to $2K, right?

My personal opinion is all these side benefits and things should be done away with. Too often it looks like ways to hide the actual benefits, and it's part of the reason I made this thread (rich people complaining about 'all the tax' they pay, when they actually pay far less than they let on). e.g. I don't paritcularly like tax deductions for individuals, and feel they could all be done through business structures, but of course fringe benefits/salary sacrifice takes advantage of that.

Meals and entertainment actually. Available to all health workers in non profit sector. I've been told salary sac cut back massively compared to before I started - there were doctors sal sac nearly 100% and paying mortgage and redrawing living expenses.

But these office holders also get salary sacrifice- see the example given in the div 293 rule.