Can someone tell me why government not curb inflation by raising GST which seems a more direct way of reducing spending. Also why target borrowers when people who most likely spend money are people with savings. Thanks.
Inflation - Why target interest rate and not raise GST?
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people who most likely spend money are people with savings
what do you base this on? Because it's a self-contradicting statement. The people who save, don't spend. That's why they have savings
Interest rates represent the cost of credit and this should change depending on the state of the economy.
If the GST went up "temporarily" to cover high inflation, I guarantee it will never come down again.
You can't separate a greedy government from its revenue.Interest rate has a greater multiplier effect than merely increasing gst. Without going into details, gst would impact only consumption. Interest rates affect consumption, investment and foreign exchange rates. It's broader.
Don't look at it merely at micro economic level. It's a macro view
GST would have to be increased massively to take the same amount of money out of peoples pockets as these interest rate rises will be doing to large mortgage holders.
Do you realise how many millions of businesses need to make changes if the 10% rate of GST changes?
Probably because most money in circulation is credit money created by commercial banks. Since interest rates are the "cost" of credit money, raising or lowering it, changes the rate at which credit money is created.
If the central bank believes the problem is too much money chasing too few goods, then lowering the rate at which the money supply expands can be achieved by slowing the rate of credit growth.
Yes. Why not punish people who don't have multiple properties making them money and reducing their income tax simultaneously at the expense of tax payers.
Well then
We should increase GST from 10% to 25% - remember it’s the well to do and the big spenders that buys a lot of unnecessary exotic goods.
The Increased GST will of course not apply to essentials like bread and milk.
People should know that if you are on high incomes, you should expect to pay more tax, and not act like evil multinationals looking to avoid tax.
because they want to have a shot at winning the next election…
The right question is, why not exempt fruit and vegetable, probably diary and eggs, and maybe even locally sourced diary, meat and seafood from GST and increase it more for services.
From several reports I’ve read, the high inflation rate is a result of huge corporate profits rather than from the little guys. Just look at what has happened to wages compared to the inflation rate over the last 9 years. Taxing big business appropriately would go a long way towards sorting this out (rather than giving them tens of millions of dollars during the pandemic, and then the businesses go on to make record profits e.g. Harvey Norman, Nick Scali, etc. Then they didn’t have to repay it!!!) Raising the GST hurts the little guys again instead of addressing the real issue of low corporate taxation.
The Biden effect!
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GST is a consumption tax. For everyone, even the poorest, even homeless.
Inflation comes from somewhere else.
Price gauging could be one cause.