Learn lessons from VAT

OBSERVATIONS can be made from the UK experience of VAT to help Australia avoid mistakes when introducing the GST, according to a UK tax expert visiting Curtin Business School.

Simon James said that while Australia leads the UK in some areas of taxation such as electronic lodgement and tax simplification, it is some twenty-five years behind in introducing the VAT equivalent – the GST.

“The UK made a number of mistakes, particularly through granting concessions which may not hit the right targets,” Dr James said.

“The UK concession for children’s clothing is based on size. It does not benefit large children but can benefit small adults who don’t mind buying in the children’s department.

“The tax treatment of food also ended in a mess. For example, caviar as cold food avoided tax, but fish and chips as hot take-away food suffered the full standard rate of 17.5 per cent.

“The Australian concession for food might lead to similar anomalies,” he said.