"Nobody in the world
has done this and the danger is that Australia ends up
spending a lot of time designing and modifying the
model," he said.
HARD TO IMPLEMENT
"If you lined up the
options for reform and said which should we be going
with, this one would be the hardest to implement and
most difficult to compensate for," he said.
Heath, education,
financial services, and fresh food were excluded from
the GST when it was introduced in 2000.
The government is due
to release a tax green paper before the end of the year
and there has been much speculation it will propose
changes to either the rate or base of the GST.
The Australian
Financial Review reported on Tuesday the GST would not
be extended to health and education, leaving financial
services and fresh food as the two areas most vulnerable
to a broadening of the tax base.
Federal Treasury
estimates that under-taxation of financial services at
$4.7 billion in 2015-16, although these figures are
widely acknowledged as being rubbery.
South Australian
Premier Jay Weatherill asked Mr Evans, now a senior
fellow at the University of Melbourne, to examine
options for extending the GST to financial services.
SHARE WORTH $332M
The study found South
Australia's share of the extra revenue generated would
be $332 million.
"At its simplest, the
proposal will operate as a tax on a banks' net interest
margin," said Mr Evans' report, which formed the basis
of a speech in September by Mr Weatherill at the
Financial Review's Tax Summit, co-sponsored by KPMG.
"For the four major
banks, the net interest margin for the 2014-15 financial
year was between 2 per cent and 2.2 per cent."
EY indirect tax leader
Brad Miller said it was an "interesting idea" but could
mean double taxation for home buyers.
"Take the example of a
young family that needs to borrow to buy a newly built
home," he said.
"They could end up
paying GST on the interest on the loan, as well as on
the purchase of the property."
BDO's lead GST partner,
Andre Spnovic, said the Mr Evans was a well respected
academic and the idea was worth considering further.
"At the moment we seem
to always be having a conversation about the rate of the
GST, but what Jay Weather ill is saying is we need to be
having a broader conversation.
"Whether there is an
appetite for the level of detail contained in this paper
is another question."
Source: The Australian Financial
Review, dated 03/11/2015. |