AUSTRALIA will be stuck with a budget deficit for several
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Abstract: AUSTRALIA will be stuck with a budget deficit for several years to come, a leading accountancy figure says. Deakin University accounting expert Graeme Wines said while Australia had been spared...
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Full text: AUSTRALIA will be stuck with a budget deficit for several years to come, a leading accountancy figure says. Deakin University accounting expert Graeme Wines said while Australia had been spared recession following the 2008 economic downturn, it would struggle to rebound in the next few years compared to Great Britain or the United States.
Treasurer Joe Hockey ruled out a GST increase this week after the Organisation for Economic Co-operation and Development (OECD) called for Australia to raise the goods and services tax from 10 to 15 per cent.
The Warrnambool-based professor said it was inevitable the GST would be examined, just as comparative nations had in the past when their income base began to erode.
"At times when economic conditions are stagnant, governments worldwide often look at the GST or equivalent and see what adjustments can be made," Professor Wines said. "With any increase in the GST, it's interesting to see what other measures are taken in order to protect low-income earners.
"Joe Hockey has rejected the idea of alterations to the GST, so the government will have to pursue a range of cost-saving measures in order to achieve the objectives they themselves set prior to last year's election." The
British equivalent of the GST the Value Added Tax (VAT) has been in place since 1973 at was originally set at
10 per cent rate on most goods and services. The VAT was split then amalgamated, rising to 15 per cent in
1981 and shifted between 15 and 17.5 per cent for the next three decades.
The Cameron government pushed up the VAT to 20 per cent three years ago.
"There are a number of international examples where the GST equivalent has risen overseas," Professor Wines said. "Whenever a government experiences a collapse in other sources of revenue, which is what the federal government is presently experiencing, naturally there will be this type of conversation."
Professor Wines said the Australian economy had been relatively stagnant over the past two years compared to the United States and several European nations.
"What MYEFO (mid-year economic and financial outlook) does show is that the Australian economy has not bounced back as what has previously been anticipated," he said. "Looking…