Ah, GST, I hardly Knew ye....

While the Rate of GST is excluded from the ToR, Exemptions from it are evidently not. And from the loose lips of several pollies over recent days, you, dear reader, should be aware of the following candidates for Exemptions:

1.     Female sanitary products
2.     Fruit
3.     Vegetables
4.     'Essentials' (definition?)
5.     New houses

And any exemptions (from which GST is mercifully comparatively free at present) will have the following effects:

•     Decrease revenue streams from GST
•     With corresponding effects on Gubmint finances overall
•     Cause immediate compliance costs on businesses dealing with mixtures of exempt and non-exempt goods (FMCG retailers, especially)
•     With corresponding claw-back through (say it quietly) cartelised price adjustments to end consumers
•     With greatly increased scope for mis-description of goods ('Liquor', in the bad old days, was frequently sold as 'Drench' out in the back-blocks). So what's to stop yer local Baked Potato outlet selling you a $4 Raw Tater, which you promptly hand back to them for a 10c Filling and Heating fee?
•     Greatly increased non-tradeable activity in lawyers, tax accountants, and other advisory consultants
•     Increased software demands as the 'exempt product list' needs to be kept up to date and applied across all affaected businesses, to say nothing of the back-end Gubmint GST Return handling
•     Increased need for tax audits, Inspectorates and ancillary regulation to ensure that noses are being kept clean
•     Greatly increased non-tradeable activity for Gubmint to create, maintain and adjudicate over exempted categories of goods - vide the ATO's extensive guides for food-related businesses here 
•     The economic effects such as the squeeze-outs of smaller businesses in favour of franchises, big-box and corporate retailers: imagine trying to decide which of These food retailers you are.

Once a first step onto this slippery slide is taken, the basis of our current GST - free of exemptions for the most part, single or zero rate for the most part - is foobarred.

The exemptions list, being essentially political in the first place, is of course then open to pressure from identity groups for their favoured set of products. And all of them will have a justification, and some apparently sound reasons for arguing their cases. And all of them can Vote......

Which will, in short order, turn the Exemptions List into an essentially pork-barrel politics exercise. The result will be a fatal and probably irrevocable infection of a hitherto internationally recognised best-practise ad valorem tax system.

We probably have a Gubmint whose idealism, fearlessness and energy could induce them to take that first step.

I'd suggest bringing Popcorn, but am unsure as to the amount of GST it will attract in future......