On every exchange of Property, Goods and Services (including Labour), the seller incorporates a 2% Expenditure Tax. The buyer would pay this tax to the seller who remits the tax to the ATO within 30 days of the end of the month. This is similar to the GST except that the tax would be applied at a rate of 2% with NO exemptions and NO refunds.
The rate of tax applied to wages would also be 2%. Businesses would adjust each employee’s gross pay, so that “take home” pay remains identical and sends 2% of each employee’s new gross pay to the ATO ( a small “one off” payment for tax refunds like negative gearing etc ).
There would be significant cost savings to businesses resulting from a reduced gross pay of each employee, and businesses would be expected to pass all these savings on to consumers by reducing the cost of goods and services as shown on the Businesses Activity Statement ( Simple BAS page ).
A simple 2% Expenditure Tax will replace nine major taxes, PAYE, GST, Payroll, Company, FBT, Capital gains, Withholding, Provisional, and Superannuation tax.
All money and goods leaving or entering Australia would have the 2% expenditure tax applied. The Australian importer, exporter or bank would be required to pay the tax.
Money deposited or withdrawn from a bank would not be taxed, only interest and dividends would be taxed ( it is not a bank debits tax ).
Each time an employee asks for a pay rise they keep it all, the employer pays the 2% tax. Everybody can have multiple jobs each paying 2% tax.
The average price of all goods and services will fall by about 16%, better than a 30% pay rise under current tax system.
Download full (PDF) submission to the Australian Parliament House 2003 Senate Economics References Committee ( link below).