TAXATION AND FAIRNESS

TAXATION AND FAIRNESS

GST

Our tax system must be progressive, supportive and fair. The GST taxes everyone and this broad-based, indirect tax is a fair tax if the vulnerable and low income earners are compensated. At least it forces the corporates, tax avoiders and evaders to contribute.

Income tax, however, is another matter.

Income Tax

Income tax is a progressive tax, meaning, that the more you earn, the more you pay. Fair enough!

But when the low to middle income earners receive a tax cut, this flows up hill to the higher income earners. This is not always fair. High income earners end up receiving the same or more advantage as those most in need.

I propose that where lower income earners receive a tax cut, high income earners should receive a tax rise, at least equivalent to the tax cut of the lower income earners, so that they remain at the same tax level as before and do not receive an unfair advantage.

Small Business Taxation relief

Small businesses always struggle in their first years.

I propose that individuals and partnerships should pay NO TAX on their first year profit and a reduced tax rate on their second year profit, when they start a brand new business.

This would be limited to individuals and would not apply to companies or other entities, so as to minimise abuse. This tax relief would only apply to brand new businesses (start-ups) and not those purchased from previous owners or existing businesses.

Individuals who received this tax relief would not be able to shut down the business and start a new one and receive the benefit again within a 5 year period from the time the business ceased. The same would apply in a partnership where any one of the partners had received this benefit and ceased a business in the past 5 years.

The 5 year period is subject to review based on practicality and modelling. This is just a suggested period at this stage.