Review of Western Australian State Taxes 1994 - Chapter Six - A Broad-Based State Services Tax
AbstractThe Chapter discusses the possibility of introducing a broad-based services tax in Western Australia. It considers the problem involved in what some see as an alternative -- the introduction of a goods and services tax -- namely, the prohibition on the imposition of excise duties by the State. The distinction between what constitutes a "good" and what is a "service" is the primary difficulty in introducing a services tax, especially when it is unclear exactly what is being provided. Two examples which are given are a mechanic and a coffee shop. The Chapter discusses the viability of introducing a services tax, in terms of equity, efficiency and simplicity. It concludes that in terms of equity and efficiency, the most preferable model would be a broad-based services tax with a flat rate and minimal exemptions. The discussion of simplicity outlines some of the difficulties experienced by other jurisdictions and concludes that the inherent complexity of a services tax would be simply too difficult to regulate and enforce. The Chapter ultimately concludes that the uncertainty involved in the introduction of such a tax makes it unlikely that a State services tax will be imposed. |