Economic and Social Implications of Goods and Services Tax

March 8th, 2021 by dayat No comments »

The overwhelming majority of product and service transactions in Australia are subjected to a 10% value-added tax called Goods and Services Tax (GST). Introduced by the Australian Howard Government in July 2000, the tax has effectively replaced the former Federal Wholesale Tax System and has phased out a number of state and territory levies including stamp duty and highly unpopular banking taxes.

Despite the success of the Goods and Services Tax, observers still believe that the 10% charge applied on business and customer transactions has a series of economic and social implications. In particular, these concerns are levelled towards the end consumer who ultimately picks up the cost of Australian GST payments.

While business that are Goods and Services Tax registered can claim credits that see them reimbursed for any payments made, it is the everyday citizen who is already paying income tax on their earnings who continues to be penalised. Indeed, it could be easily argued that GST is simply a regressive tax that potentially targets low income earners and that the Australian Government is now consuming more of their earnings than ever.

Peter Costello, the former Treasurer of the Australian Government, certainly seems to believe that Goods and Services Tax is anything but regressive. During his tenure, which ran from 1996 to 2007, Costello argued that the abolition of state and territory taxes and their subsequent replacement had left consumers no better off or worse off than they originally were.

Consumer behaviour spiked dramatically in the months preceding the introduction of Goods and Service Tax, with many end users rushing out to purchase high-end consumer products that would become much more expensive as soon as the new tax system began. It is significant to note that Australian consumer spending and economic performance spiralled into negative growth during the first GST fiscal year.

Small businesses have also felt the impact of the new taxation system. Unlike consumers, a business that is registered for Goods and Services Tax can claim refunds from the Government in the shape of GST credits for any payments made under the new regime. Even so, small business owners claim that the increased cost of administration and continuous interaction with the Australian Tax Office is little more than the result of bureaucratic red tape.

Goods and Services Tax also had a negative impact on the Australian property market. The tax itself led to an increase of 8% in the price of new homes while demand fell by over 12%. Although the market recovered by 2004, arguments continue to rage over economic and social implications of the new tax and to a certain extent, this is largely justified by the fact that it is the consumer who has to shoulder the bill.

Article created by Roger Partridge on behalf of Business Switch Pty Ltd. Work out your Goods and Service Tax payments and credits with

The Benefits of Bartering Goods and Services Between Private Individuals

February 8th, 2021 by dayat No comments »

Bartering is not a new concept. It’s been around probably for as long as man has walked the earth. In fact, long before money existed people traded goods for services or services for other services. That’s how commerce took place.

Today, bartering is as popular as it has ever been, particularly among small businesses that are often strapped for cash. The internet features hundreds, perhaps even thousands, of barter exchange websites that have been set up to help small, struggling businesses survive and even thrive by providing a way for them to access needed goods or services they might not otherwise be able to afford.

The owner of a shoe store may trade a pair of loafers to the dentist for a check-up and a teeth whitening treatment if both are members of the same barter exchange and have access to one another. An interior decorator may barter her professional service for a pair of stylish earrings and the transaction, without the exchange of any money, will be helpful to both businesses.

But bartering is not exclusive to small businesses. It is also commonplace today among ordinary consumers – private citizens. That’s because the depressed economic climate has left many people short of funds, without employment or facing other hardships. Many regular folks just don’t have the money needed to buy the goods or services they want or need. But, they often have something they can trade.

Barter exchange websites exist for consumers, too. And every day more and more people with access to computers are joining these websites and taking full advantage of the opportunities that exist on them. In fact, online communities like Craigslist and Swap Thing provide environments that encourage members to trade goods and services without any movement of money. Not a single dime changes hands.

These websites are adding members daily … lots of them. Just recently, Craigslist had a whopping 142,000 postings offering everything for exchange except the kitchen sink. And it’s actually possible that was available, as well.

Swap Thing is even more engaged. It generally has up to a phenomenal 35 million listings of everything from school clothes to school books … vacations to home rentals … labor for merchandise … and on and on and on.

Does it really work for people who commit themselves to the idea? The answer is a resounding yes, particularly in these economically-depressed times when money problems are common in many households.

Consider the case of a woman I will call Rachel (not her real name). She and her husband Ted (not his real name, either) live in a Midwestern city and have always dreamed of vacationing in Cape Cod. For Rachel, in particular, it’s been a lifelong dream. And Rachel and Ted were finally going to realize that dream … until they found out that decent lodging in the area would cost about $200 a night, somewhat beyond their vacation budget. In most cases, that shortness of available cash would absolutely squelch any chance of the vacation becoming a reality.

However, given the current proliferation of barter exchange websites for consumers, Rachel seized upon an idea. She advertised her husband Ted’s professional accounting services in exchange for lodging for 3 or 4 nights in a Cape Cod hotel, motel or similar kind of lodging. The posting appeared on Craigslist and, as a result, Rachel and Ted will be able to enjoy their Cape Cod vacation – cost-free.

There are, of course, thousands of other examples of successful swaps or barter exchanges between consumers in which each party to the exchange ended up a winner. In fact, each year, as summer ends and fall arrives – along with the beginning of a new school year — many hard-pressed moms are able to trade a coveted service for school uniforms for their school-age kids. That, of course, saves a costly trip to the clothing store. Parents and older kids, especially those already in college, enjoy trading for school textbooks which any advanced student knows tends to be alarmingly expensive.

Clearly, barter works as well for individual consumers as it does for small businesses. And, as is true for small businesses, the consumer who engages in bartering meets many new friends (businesspeople meet and get many new customers) … enjoys a transaction in which he or she almost always wins … and develops a pastime (or habit) that often turns into a compelling passion.

There is more for ordinary consumers to like about bartering, as well. It provides a real opportunity to move and rid yourself of old, dust-collecting items (just as would happen if you conducted a yard sale) … enjoy the true fun that comes from trading (you’ll be like a “kid in a candy store”) … and, of course, when you trade or barter, you save money. That is particularly meaningful now, in these difficult economic times.

What’s more, you may also be able to acquire goods that you’ve always wanted, but could never afford (such as expensive, if slightly-used, luxury items, including clothing and jewelry, exotic vacations or great electronic merchandise for your home)… or services, including health or cosmetic care and treatment … or professional services, such as accounting, tax returns, even legal advice just because you’re a member of a website exchange community=2 0and you’re willing to give up something to get something in return – with absolutely no exchange of cash.

So now you need to ask yourself: is bartering something that I can enjoy and profit from? If you’re like millions of other people, the answer is probably yes. And even if you are someone who stands apart from the crowd, the answer is still likely to be yes. Bartering is a social experience … and generally quite enjoyable for those who participate in it. In all likelihood, it is something you will enjoy for its social aspects and profit from, as well, because it will enable you to acquire needed goods and servi