Challenge! Read this one! (1 Viewer)

[M-THIS]

ok...

Please tell me whether the GST is regressive or Progessive, considering that food is exempt (as in Australia's case)

before you answer, it is easly though it is just a 10% tax, but considering that the top quintile spends a great deal more! is it progressive, in that proportion of GST paid gets more as the level of income increases!

look at table 3 on this link for a regressive view. http://www.aph.gov.au/library/pubs/CIB/1998-99/99cib07.htm#2

it suggest that it is progressive, but dixon (leading edge) clearly states it is regressive, in that GST is a bigger burden (% wise) to lower income earners than to higher income earners!

SERIOUS ANSWERS ONLY

 

[stinger]

i think in theory, regressive

but in practice, a little progressive

not sure what you'd say in an essay or anythin tho

 

[-=«MÄLÅÇhïtÊ»=-]

It's regressive, because although the rich spend a great deal more, their cost of living doesn't increase in the same ratio as their income difference with the poor. So as a proportion of their total income, the amount of GST outlays is not as high as the poorer ppl.

 

[M-THIS]

yeah, thats what dixon thought!

but... knowing that the richer spends more, and thus more on non-food items, compared to the poorer, which spends most of their income om goods (little saving, and most of income on food) which is GST free.

look at table 3 in my link above!
means they are not effected (v. little) on GST, whereas, the rich, buying clothes, computers etc are effected a lot by the GST.

Look at that

 

[-=«MÄLÅÇhïtÊ»=-]

They havent made the sample size clear, so I'll assume the sample data isn't the population. 1.6% and 2% are very close. Too close to provide sufficient evidence to suggest that the true mean of 1.6% is significantly higher than the true mean of 2%. Hence the data is inconclusive.

At your hsc level, stick with dixon's theory. Your're doing to hsc to get a high uai, not to be right.

 

[M-THIS]

yeah thats true!
tahnks mate!

"just need to know it! don't need to understand it!"

 

[Minai]

Exactly
agreed with malachite
if u end up taking macroeconomics at higher levels at uni, u might like to explore this as a research topic/thesis because it is an interesting thought

 

[Bambul]

Here's what you need to know (not necessarily what is right):

As your income goes up, the amount of income that you spend on consumption for each extra dollar. ie. your MPC decreases as your income increases. Since the GST is only charged on consumption and not savings, the proportion of income payed as GST decreases as your income increses. By definition, this makes it regressive.

Of course, there are theories that go against it, but don't quote them because as far as you are concerned they are wrong! I would go over some, but it may confuse you and make you give an answer that will be marked as wrong.

 

[sif not 99]

this reminds me of a funny moment in an accounting tutorial this year,

Keeping in mind im at Usyd, if any of you go there you will understand, was I arguing that the GST was regressive (and all that entails, unfairness yada yada yada) up against about 7 eastern suburbs GPS rich boys who couldnt for the life of themselves see how my argument being that the GST was regressive had any possible credence?

Perhaps their $350 pairs of jeans were cutting off their circulation of blood to their brain but at least I could aknowledge both sides do have some merit....but by convention and applying common sense it HAS to be seen as regressive in nature

 

[Minai]

hahaha
they dont sound too articulate, nor commonsensical

 

[M-THIS]

haha... SIF not 99...

common sense maybe not! but in pratice it is onpen to discussion! again have you looked at the charts in that link, sif not 99?